Ontario plugged in to the reality of EVs

The McGuinty government decided to do something when it announced it would offer rebates up to $10,000, beginning next July, to anyone who purchases a plug-in hybrid or all-electric car. These car buyers would also be given special access to high-occupancy vehicle lanes and parking lots at GO Transit stations.

The goal is to have one out of every 20 cars on Ontario roads be a plug-in vehicle by 2020.

Automotive consultant Dennis DesRosiers is calling it a "desperate move to appear green." The Star, in a recent editorial, called it an "ill-thought-out subsidy scheme" that favours one green technology over others.

Both of these comments are missing the bigger picture. This isn't about supporting a particular type of green technology or a particular company. It's about acknowledging the global rush toward the electrification of transportation, and taking the early steps that will be necessary to compete against other jurisdictions for investment and jobs.

There's no disputing the bad optics of having Premier Dalton McGuinty announce the incentives at a GM Chevrolet dealership, with Chevy's new Volt electric car in tow. The province now owns a small stake in the newly restructured GM, so it's easy to accuse McGuinty of playing favourites – as Toyota Canada did.

But the Volt is just one of several cars that will qualify for the incentives in coming years, and it won't necessarily be the first to hit the market. Ford, Chrysler, Nissan, Mitsubishi, Hyundai and Toyota all plan to have plug-in hybrids or electric cars in commercial production between 2010 and 2012.

Tesla Motors is already selling in Ontario, though the price tag is prohibitive for most. Other newcomers to expect include Bright Automotive, Think Global, Coda Automotive, Phoenix Motorcars and Toronto's own ZENN Motor. And don't forget Chinese automakers, such as Chery, Geely and Warren Buffett-backed BYD. There's also Canadian auto-parts giant Magna International.

"We're trying to send a signal to the automotive industry that goes far beyond the five major manufacturers we have in Ontario," said an official in the premier's office, adding that McGuinty and International Trade Minister Sandra Pupatello have been courting many of these companies for months.

By offering up these electric-car incentives, McGuinty is showing the international community that Ontario is serious about creating demand for electric vehicles and investing in the infrastructure to support it – that is, making the necessary upgrades to the electricity system, putting in place a charging-station network, updating standards and codes, and funding related research at colleges and universities.

If Ontario doesn't show this commitment, automakers – old and new – will set up manufacturing in places that do. "There are multiple jurisdictions moving into this space," says Nicholas Parker, executive chairman of the Cleantech Group, which is working in China these days trying to convince car manufacturers there to set up electric-car manufacturing in Ontario.

Parker said the incentives announced by the province are a good start, but the bigger challenge will be packaging all of what Ontario has to offer – skilled workforce, easy access to U.S. market, strong automotive R&D, and now world-leading customer incentives – and making a convincing sales pitch.

"About 50 per cent of this is branding, and pulling together the different assets we have," he said.

DesRosiers makes several comments that just don't hold up. For example, he says the incentive is "being played as a move to save the environment." Maybe there is a strong environmental argument for embracing electric cars, which are more efficient. When charged in a province like Ontario they're also much cleaner. By 2020, more than 90 per cent of the province's electricity supply will come from emission-free sources.

But going electric is also about energy security, economic security and staying relevant, not to mention competitive, in a changing marketplace.

Ontario gets its gasoline and oil from outside the province. But electricity, along with jobs created to produce it, is generated here.

We'll also be paying more and more for gasoline as the realities of peak oil catch up to us and once carbon pricing hits Ontario pumps.

DesRosiers says if plug-in vehicles are to be successful, then "the firms behind these technologies are going to have to get their price points down to a level where consumers buy them on their own merit." But getting to those price points requires volume, and getting volume means rewarding early adopters for taking the risk on new technologies.

He calls a $10,000 incentive a "bribe" to get consumers into these cars, but how is this different from the billions of dollars thrown at the big automakers over the years to keep them in Canada?

Finally, DesRosiers pegged the total cost of the subsidy over 10 years at about $3.5 billion. That's a highly misleading figure. In fact, the incentives that were announced range from $4,000 to $10,000 – DesRosiers is assuming all the rebates handed out will be on the highest end.

He's also assuming the rebates will still exist 10 years from now.

McGuinty made clear, however, the rebates would be lowered over time and eventually phased out as market momentum builds – well before 2020.

It's more likely that over a decade, rebates aimed at getting 350,000 plug-in vehicles on the road will never surpass $1 billion.

This is still a big number. But consider that we already offer $2,000 for regular hybrids. Also consider that the incentive for plug-in cars in the United Kingdom is $9,100, and in the U.S. it's $8,400. Ontario, by setting a $10,000 maximum, is merely upping the ante as jurisdictions compete for pole position in a race for jobs and investment.

This isn't about picking winners. If it's anything, it's about not becoming a loser in a world that is dramatically changing, whether we want it to or not.