Federal Government Rebates on Electric Cars

Federal Government Rebate on Electric Car Purchases

Wednesday, May 1, 2019, marks the day when federal rebates to encourage Canadians to buy electric cars came into effect; rebates are up to $5,000 off the purchase prices of electric cars.  Whereas electric cars priced under $45,000 are eligible for the full $5,000 rebate, plug-in hybrids that combine electric power with traditional combustion engines can fetch up to $2,500.  The liberal's rebates on electric cars will be available on upgraded versions of qualifying base models, i.e. upgrades (e.g. leather interior, longer driving range, etc.) that cause the price to exceed $45,000 but not $55,000 will continue to qualify for the rebate. 

Policy Rationale

The policy rationale underlying the federal (and in some instances, provincial) rebates on the purchase of electric cars is to: • encourage consumers to purchase electric cars; • encourage car manufacturers to innovate and produce electric vehicles; • reduce greenhouse gas emissions produced from vehicles.  As of 2019, transportation is responsible for approximately 1/5 of Canada's carbon footprint, and represent an important part of Canada's goal to reduce emissions by 30% of what they were in 2005 by 2030. 

Doug Ford Kills $14,000 Rebate on Electric Car Purchases

The rebate is paid directly to the dealers to reduce the sticker price at purchase.  It is estimated that the program will cost $300 million over three years and that the money will be available on a "first-come, first-served" basis. The rebate will end as soon as the allocated funds for the program are exhausted.  In provinces where a provincial rebate also applies, such as in Quebec ($8,000) and British Columbia ($5,000), the federal rebate will apply in addition to any provincial rebate.  Doug Ford killed the province's $14,000 rebate shorty after taking office last year.  Car dealerships noticed a marked drop in the sale of electric cars after Doug Ford scrapped the provincial rebate. For instance, Nissan noticed a drop from 695 in August to 10 in November. 

Qualifying Electric Car Models

In total, there are currently 15 fully electric vehicles and 13 plug-in hybrids that are eligible for rebates in Canada.  As an immediate response to the federal government's rebates on electric cars, Tesla lowered the price on its standard Model 3, the most popular model in Canada, to $44,999. The higher-range version of the Model 3, which offers up to 389 km on a single charge in comparison to 150km for the standard Model 3, priced at $53,700 would still qualify.