Canada to phase out ICE vehicles by 2035

The country is taking a familiar approach of increasing annual targets and the ability to trade credits

Canada to phase out ICE vehicles by 2035
Canada will gradually phase in its ZEV targets between 2026 and 2035

Canada will ban the sale of new cars and light duty trucks with ICEs under rules published this week.

Under the new Electric Vehicle Availability Standard, auto manufacturers and importers must meet annual zero-emission vehicle (ZEV) regulated sales targets.

In 2026, at least 20pc of new light-duty vehicles offered for sale must be ZEVs, increasing annually to 60pc by 2030 and 100pc by 2035.

Gasoline and diesel-fueled vehicles can still be driven after 2035 and can be bought or sold as used vehicles. But the government says putting in place a 100pc ZEV sales target by 2035 will effectively end the use of these vehicles by 2050.

The regulations define ZEVs as: battery-electric vehicles (BEVs) powered only by electricity; fuel-cell vehicles (FCEVs) that operate using hydrogen, and plug-in hybrid electric vehicles (PHEVs) that can run exclusively on electricity for a minimum distance that is yet to be specified.

Companies that perform better than their ZEV targets generate credits which they can bank for up to five years or trade up to 2035. Companies that do not meet their targets generate a deficit, which they must cover with purchased credits every three years.

The final version of the standard also includes a new set of provisions that enable manufacturers to obtain early action credits (EACs) for ZEV sales in 2024 and 2025. To qualify, a company’s fleet must have had at least 8pc ZEVs in 2024 and 13pc in 2025.

"Getting more electric vehicles on the road is another example of how we are taking climate action while helping make life more affordable," says Steven Guilbeault, Canada's envirnoment minister.

"And our investments to position Canada as a significant player in the global electric vehicle manufacturing and battery supply chain shows how we are taking advantage of the economic opportunities provided by the emerging low-carbon economy.”

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Consumer purchases of ZEVs will be supported by C$2bn ($1.5bn) invested by the Canadian government in the Incentive for Zero Emissions Vehicle Program (iZEV), which offers up to C$5,000 in incentives for each consumer purchase.

Combined with existing provincial incentives, this will bring the purchase price of some new ZEVs to a range comparable with gas and diesel vehicles, the government says.

Charging infrastructure

This month Canada's federal government also committed funds for another 30,000 chargers to be built across the country, bringing the total number to 43,000 to be built by the federal government over the next few years.

The states of Quebec, British Columbia and and Ontario also have plans to roll out additional networks of chargers on top of the federal programme.

The government acknowledges that accessing charging infrastructure will be difficult for those that live in remote areas, and suggests that PHEVs could help bridge the gap for these consumers while infrastructure for ZEVs continues to be improved in rural and northern regions.

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