Posthaste: High EV prices remain a barrier, pushing curious buyers to consider China
The high cost of electric vehicles (EVs) in Canada remains a barrier for many thinking of buying one, which is a big reason why prospective buyers are considering those made in China.
Prime Minister Mark Carney in January opened the door to cheaper made-in-China EVs when he announced Canada would allow 49,000 Chinese vehicles into Canada at a tariff rate of 6.1 per cent. The previous tariff rate was 100 per cent.
At the time, the government said more than half of the imported vehicles would cost less than $35,000, compared to the current average EV price of between $50,000 and $70,000, depending on the make.
Canadians are taking notice of the price difference, as more than half of EV-curious buyers would consider a Chinese model, such as those made by BYD Co. Ltd. or Chery Automotive Co. Ltd., with 31 per cent pointing to the affordability of the incoming brands, according to a new survey from Rates.ca.
Prices remain a major hurdle for those considering an EV. The survey said 59 per cent of those Canadians interested in an EV are mostly concerned about the price, followed by 54 per cent concerned about the battery range.
That’s why the plan for cheaper EVs “really is going to move the needle,” Erik Johnson, vice-president and senior economist at BMO Capital Markets, said in the report.
As part of the federal government’s plan to reduce EV prices, it has also introduced the electric vehicle affordability program (EVAP) that offers incentives of up to $5,000 when purchasing an EV costing less than $50,000.
But despite the measures to boost EV sales, interest is still fairly weak. Rates.ca said just 17 per cent of Canadians are interested in owning an EV within the next five years, while another 13 per cent are considering an EV but not in the near term.
High gas prices in Canada may change the sentiment. Historically, periods of high fuel prices have changed vehicle trends, Rates.ca said, though it added that saving a few hundred dollars in fuel won’t cover the extra costs of buying an EV.
“We’re starting to see interest come back,” Daniel Ivans, a Rates.ca insurance expert, said in a release. “Fuel prices and rebates are helping bring EVs back into the conversation, and lower-cost models are making them feel more attainable.”
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Canadas’ economy grew 0.1 per cent in January, slightly beating economist expectations.
The country saw gains in mining, as well as oil and gas extraction and construction were among the nine industrial sectors to expand in the month, more than offsetting losses in manufacturing and automotive production.
The surprise comes after the country reported a disappointing decrease of 0.2 per cent in December.
Of note, real estate reported its first decline in 10 months amid falling housing prices across the country.
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Today’s Posthaste was written by Ben Cousins with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.
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