In the News: Why Government Mandates on Electric Cars Will Not Work

November 27, 2023 | Toronto, ON
Contributed by Leonard Waverman

Leonard Waverman was the dean of the DeGroote School of Business at McMaster University and the Haskayne School of Business at the University of Calgary. He is a former director of BNP Paribas Canada and the C.D. Howe Institute.

The federal Liberal government has mandated that in 2035, 12 years from now, no internal combustion engine cars and light trucks (ICLTs) can be sold in Canada. This ban is to take place gradually, beginning at 20 per cent of vehicles sold in 2026 having to be electric, just over two years from now.

But in 2021, only 66,800 fully electric vehicles were sold in Canada, a tiny 0.04 per cent of the vehicle stock. And the number of electric vehicle sales has stalled both here and in the United States. Ford is postponing US$12-billion in EV production facilities. Volkswagen has stopped production of two of its EVs. Tesla Inc. TSLA-Q keeps slashing its sales prices to move inventory. General Motors is delaying producing EV trucks in its Michigan plant by a year.

Any new technology can start off quickly because there are early adopters, those people who rush to buy something new such as an electric vehicle. These early adopters, however, are not generally representative of the population at large.

Many technologies have risen quickly but then stalled or fallen – for example, virtual reality headsets were a big hit two years ago. Who hears of them now? Several observers mistake these first sales as the beginnings of long-term adoption, but it’s not necessarily so.

Many new technologies come to the market to fill an unmet need – VR headsets, washing machines, fax machines, cellphones for example. While EVs do satiate an abstract desire on the part of the environmentally conscious consumer, they do not meet any tangible unfilled need; they take you from A to B as do existing ICLTs.

That’s why these mandates will not work – EVs need to supplant existing uses, and currently they do not, despite all their technological advances.

Read the full article in the Globe and Mail.

Leonard Waverman

Professor, Finance & Business Economics

Leonard Waverman is a world-renowned expert in international telecommunications and global resources management and specializes in microeconomics and industrial organization, the economics of telecommunications, energy and resource economics, international trade, public utility and public enterprise economics. He has authored the influential Connectivity Scorecard, an annual index that ranks countries according to how advanced their communications networks are in promoting productivity and growth. Dr. Waverman earned his BCom and MA from the University of Toronto and his Ph.D. in economics from MIT. Previously, he was a professor of economics at the University of Toronto and the London Business School, and Dean of the Haskayne School of Business, University of Calgary, and Dean of the DeGroote School of Business, McMaster University.

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