Buying an electric car becomes cheaper as federal rebates kick in [UPDATED]

OTTAWA—Federal rebates to encourage Canadians to buy electric cars took effect Wednesday, shaving as much as $5,000 off the purchase prices of electric cars.

The rebates were announced in the last Liberal budget and fully electric cars that have starting prices of less than $45,000 are eligible for the full $5,000 rebate. Plug-in hybrids, which combine electric power with traditional combustion engines, can get up to $2,500 off.

The rebate will still be available on higher-end versions of the base models that are eligible—such as those that come with upgrades like leather seats, more colours and longer driving ranges—as long as the final price, options included, doesn’t exceed $55,000.

Tesla, whose Model 3 was the most popular electric car in Canada last year, lowered the price of its standard-range version of the Model 3 to $44,999 to come in just under the base-model price limit but this version can only get 150 km on a charge.

But because the company lowered the price of the standard-range Model 3 below $45,000, the $53,700 higher-range version, which can travel 389 km on a single charge, also becomes eligible.

Fifteen fully electric vehicles, including base models and upgrades, as well as 13 plug-in hybrids, are currently eligible for the rebates.

The rebate is paid to the dealers and will reduce the sticker price at purchase. It is not paid to the consumer. The program is costing $300 million over three years and the money is available on a first-come, first-served basis: once the allocated money is gone, the program ends.

In Quebec and British Columbia, which offer their own provincial rebates of up to $8,000 and $5,000 respectively, the federal incentive will be applied in addition to the provincial one on eligible cars.

Electric-car experts say there is no doubt government incentives help drive electric-car purchases. Ninety-seven per cent of electric-car sales in Canada have taken place in Quebec, B.C. and Ontario, all of which have offered rebates. Ontario’s new Progressive Conservative government killed the province’s $14,000 rebate shortly after taking office last year.

Carmakers reported a marked decline in electric sales in Ontario after the rebate was dropped. Nissan, for example, reported the number of Leafs sold in Ontario fell from 695 in August to just 10 in November.

“At this point in the market the incentive still matters,” said Dan Woynillowicz, policy director with Clean Energy Canada.

He said the goal of the rebates is to encourage the purchase of electric cars to reduce greenhouse-gas emissions and encourage more production of the electric cars to help bring the price down with economies of scale.

Electric cars accounted for 8.3% of passenger cars sold in Canada in the third quarter of 2018, according to FleetCarma, a Canadian technology company that tracks electric vehicles.

Transportation as a whole makes up about one-fifth of Canada’s overall carbon footprint and passenger vehicles are responsible for half of all transportation emissions. With more than two-thirds of Canada’s electricity generated by renewable sources, plug-in cars can mean a significant reduction in greenhouse-gas emissions and are a critical part of Canada’s plan to cut emissions to 30% of what they were in 2005 by 2030.

Some analysts suggest the price of electric cars will fall to match their combustion counterparts over the next five years and that they will largely be cheaper than gas-powered equivalents by 2025.