January 25, 2024 – The federal government’s 2035 Zero Emission Vehicle (ZEV) mandate needs a reboot since forecasted vehicle sales and supply will not meet Ottawa’s targets, according to a new report from the C.D. Howe Institute.
In “Time to Reboot: The Federal ZEV Mandate Requires Flexibility,” author Brian Livingston examines whether Canadians will be able to buy enough imported or Canadian-built ZEVs to meet the mandate. The federal government’s regulations for the sale of a minimum number of ZEVs in Canada increase from about 100,000 ZEV light vehicles in 2022 to 300,000 in 2026, 900,000 in 2030 and 1.5 million in 2035. Notably, the author uses a bottom-up approach to estimate forecasted sales of ZEVs by all major sellers of light vehicles in Canada.
“Canada should be able to meet the 2035 100 percent ZEV mandate for about 270,000 passenger cars, only 18 percent of the market, but will be unlikely to meet the 2035 ZEV mandate for the 1,240,000 remaining light vehicles – pickup trucks, vans and SUVs/crossovers – comprising 82 percent of the market,” says Livingston.
The author explains that the shortfall starts off small in 2026 and 2027 but increases rapidly, reaching 650,000 in 2035. These 650,000 light vehicles are the difference between the author’s overall forecasted demand of 1,510,000 light vehicles in 2035 and forecasted supply of 860,000 ZEV light vehicles. Livingston adds that this shortfall will either be made up by the sale of internal combustion engine (ICE) light vehicles or will result in an inability to meet the demand for light vehicles in Canada.
Overall, he says, we cannot wait until 2035 to realize that the federal ZEV Mandate will not be met – adding that the gap between light vehicle demand and forecasted ZEV light vehicle supply will cause severe market disruptions.
Instead, the author says a better approach would be to reject a hardline ZEV mandate in favour of a more flexible Plan B focused on emissions rather than ZEV targets. He stated that if sales of battery electric vehicles (referred to as BEVs) do not reach 100 percent by 2035, some ICE light vehicles will need to be sold in 2035. In addition, the 20 percent cap on plug-in hybrid vehicles (PHEVs) should be eliminated, with all conventional hybrid and PHEV light vehicles counted as ZEVs along with BEVs.
“Finally, the federal government may have to accept that the 100 percent ZEV target is not feasible by 2035, and therefore must include flexibility in the federal ZEV mandate to back away from the 100 percent ZEV target,” concludes Livingston.
For more information contact: Brian Livingston, Executive Fellow, School of Public Policy, University of Calgary; Lauren Malyk, Senior Communications Officer, C.D. Howe Institute, 416-865-1904 Ext. 0247, lmalyk@cdhowe.org; Gillian Campbell, Communications Officer, C.D. Howe Institute, gcampbell@cdhowe.org.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.