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'I'm just trying to get as many as I can.' Surging gas prices stoke demand for electric cars

·6 min read
FILE PHOTO: A charging port is seen on a Mercedes Benz EQC 400 4Matic electric vehicle at the Canadian International AutoShow in Toronto
FILE PHOTO: A charging port is seen on a Mercedes Benz EQC 400 4Matic electric vehicle at the Canadian International AutoShow in Toronto

Sales of electric vehicles in Canada are rapidly accelerating in the face of rising gasoline prices and new commuting schedules created by the pandemic.

In the first quarter of 2022, electric vehicles accounted for 8.2 per cent of new vehicle registrations in Canada — up from five per cent the previous quarter, according to S&P Global Inc.

One in twelve new automobiles sold in Canada was a zero-emission vehicle, and industry experts say the early-adopter stage appears to be ending, as considerations about range give way to considerations about affordability.

The shift comes as the federal government mandates that at least 20 per cent of all new passenger vehicles be zero-emission vehicles by 2026 and major automakers are unveiling dozens of new electric vehicles, some of which are designed to be affordable, breaking from the luxury EV’s that have dominated years past. Already, many automakers are reporting that demand for electric vehicles exceeds supply, and consumers are signing up for years-long waitlists.

“I’ve seen increases in traffic on our website for EVs like I’ve never seen before, and it directly corresponds to the higher gas prices,” said Don Romano, chief executive of Hyundai Motor Co.’s Canadian unit. “It was always growing at a pace, but it’s accelerated now that we have $2 a litre or US$5 per gallon gas, and it doesn’t look like it’s going to abate anytime soon.”

Romano said that as recently as two years ago, his company had excess inventory of EVs and “was trying all kinds of short-term, getting acquainted leases and all kinds of stuff just to try to move them.” Today, there is a two-year waitlist.

While the battery electric vehicles offered by Hyundai begin at $46,000, the company’s plug-in hybrid electric vehicle — an intermediate transition technology that combines both gasoline and battery — starts at $30,000, according to the company’s Canadian its website.

“I’m just trying to get as many (EVs) as I can,” said Romano. “I have an order bank from customers going out all the way through the next model year.”

Climate change regulations designed to limit supplies of fossil fuels and the sanctions against Russia have created the potential for higher gasoline prices for a longer period.

The federal government also recently unveiled new clean fuel standards that ramp up between 2023 and 2030, and will require​​ fuel producers and importers to reduce the carbon intensity of gasoline and diesel. Clean Energy Canada, a think-tank based at Simon Fraser University, estimates that the new standards would add between six to 13 cents per litre of gasoline, which would be used to support the buildout of electric vehicle infrastructure such as charging stations.

The pandemic gave us all a moment to pause and really think about our purchases

Tara Powadiuk

Meanwhile, Volvo Car Group’s 2022 mobility trends report that found 53 per cent of Canadians said they were driving less because of the surge in gasoline prices, and that 73 per cent said “it is important to contribute to a greener future with their car.”

Of course, electric vehicles are only one option: 12 per cent of Canadians started biking, 11 per cent started carpooling or using public transit, and five per cent said they switched to an electric vehicle or plug-in hybrid electric vehicles.

“The pandemic gave us all a moment to pause and really think about our purchases,” said Tara Powadiuk, marketing director at Volvo Car Canada Ltd.

Powadiuk said she owns a plug-in hybrid electric Volvo XC90, which has a 60-kilometre range as an electric vehicle. As a result of the pandemic, she said she works from home and mainly drives short distances, allowing her to drive her vehicle primarily in its electric mode.

“I think it’s opening the door to think about both EVs, as well as plug-in hybrids,” she said about the pandemic.

 Gas prices at a Petro-Canada station in Toronto on May 8, 2022.
Gas prices at a Petro-Canada station in Toronto on May 8, 2022.

Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association, said that while higher gasoline prices may be leading some Canadians to consider electric vehicles, it usually takes a longer sustained period before that materializes into actual sales.

“There is no doubt that an EV will save you money on gas,” said Kingston. “That said, there is still a price gap” between EVs and automobiles powered by internal combustion engines, he said.

To be sure, there are obstacles that could slow EV adoption. Despite heavy investment and ongoing growth that has already created thousands of charging stations in every province in Canada, Kingston said there remains a charging gap. Rising interest rates, and the potential for a recession, could also slow car sales if consumers pull back from taking on heavy debt loads.

But higher fuel prices could be causing EV demand to rise faster than anticipated. Cody Green, co-chief executive of Canada Drives, a used-car sales platform, said that monthly searches for electric vehicles on his website doubled between January and June, to around 20,000. During that time, gas prices rose to about $2.00 per litre from about $1.47 per litre.

Within Canada, British Columbia had the highest rate of electric vehicle adoption, accounting for 17.1 per cent of new sales in the first quarter of 2022, followed by Quebec at 13.6 per cent and Ontario at 5.7 per cent, according to S&P Global.  

British Columbia also recorded the highest average gas prices in Canada this week, at $2.158 per litre, while Quebec was third at $2.124 per litre. Ontario was the cheapest anywhere except Alberta at $2.00 per litre. 

“I think EVs are becoming more and more mainstream,” said Green. “At least in the early days, people’s reluctance was on sort of range anxiety, I think was the term that was used. I think that’s coming down as see more of these vehicles on the road and we’re seeing a real shift, and it’s it now it’s coming down to what’s the best decision on affordability.”

Thomas Tetzlaff, a spokesman for Volkswagen AG’s Canadian unit, said higher gas prices have contributed to a tightness in the market for new EVs, but that demand was outstripping supply even before prices shot up to their current level.

“It’s an interesting time in our industry,” Tetzlaff said in an email. “I’ve been in it for 30 years, and have never seen so much change happen so fast…and we’re only getting started.”

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