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Inflation, high interest rates could be speed bumps on Canada's EV transition

Inflation and elevated interest rates pose significant challenges for the auto sector in 2024, according to industry expert Brian Kingston, CEO of the Canadian Vehicle Manufacturers' Association. These economic factors may hinder the transition to electric vehicles (EVs), as vehicle purchases are the second-largest expenditure for households after homes. Higher financing rates could deter Canadians from buying new vehicles, delaying purchases for several years. Kingston also believes that these economic headwinds will impact the industry's move towards electrification. He questions the feasibility of the federal government's goal of achieving 100% zero-emission vehicle sales by 2035, citing insufficient support available to Canadians.


A major obstacle to EV adoption is the price disparity between electric and gas-powered vehicles. While this gap is expected to narrow over time, Kingston asserts that it won't be sufficient to encourage widespread adoption, especially in the current inflationary environment. He suggests that stronger incentives are needed to bridge this price gap. Additionally, inadequate public charging infrastructure presents another challenge. Kingston notes that achieving Ottawa's EV target will require a substantial increase in charging infrastructure, approximately 17 times the current capacity over the next 11 years.


Despite these challenges, EV production is on the rise, with automakers investing in expansion, often with government backing. The Canadian market saw a significant increase in EV models, from three in 2012 to 77 in 2023. Kingston anticipates an additional 40 models becoming available to Canadians in 2024, signaling continued growth in the EV market despite the obstacles.


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