the canadian vehicle manufacturers’ association, …...older vehicles have significantly higher...

Members: FCA Canada Inc. Ford Motor Company of Canada, Limited General Motors of Canada Company

August 24, 2018 The Honourable George Heyman Minister of Environment and Climate Change Strategy PO Box 9047 Stn Prov Gov Victoria, B.C. V8W 9E2 Email: [email protected] Re: Towards a Clean Growth Future for B.C. – Intentions Paper: Clean Transportation

Dear Minister:

The Canadian Vehicle Manufacturers’ Association, representing FCA Canada Inc., Ford Motor Company of

Canada, Limited and General Motors of Canada Company, appreciates the opportunity to provide input to

British Columbia’s Intentions Paper on Clean Transportation – Building a Clean Growth Future for B.C. We

recognize that British Columbia (BC) wishes to build upon its strong climate change policy foundation and

currently seeks input on the development of a long-term clean growth future strategy and the pathway to

meet government’s newly set GHG targets for 2030 and 2040.

There are two important themes in our recommendations.

• The CVMA recommends that the government establish an accelerated vehicle scrappage

program that will not only provide significant opportunities to reduce the GHG emissions of the BC light duty vehicle fleet, but will also provide significant reductions in smog-causing (criteria) emissions, increase the number of vehicles in the BC fleet capable of using higher renewable fuel blends, and improve consumer road safety.

• The CVMA also recommends and endorses a non-regulatory BC Government collaborative Plug-in Vehicle Adoption Policy Initiative which includes government, industry, NGOs and other stakeholder groups to enhance consumer demand for plug-in vehicles, and infrastructure improvements, instead of a ZEV Mandate which will have significant negative consequences for BC, its citizens, and new vehicle dealers.

Our detailed comments on the BC Intentions paper provide supporting information for our recommendations. We trust that the comments provided will be carefully considered and we wish to engage in a further discussion on the BC Long Term Clean Growth Strategy. Should you have any questions, please do not hesitate to contact me directly at 416-364-9333. Yours sincerely,

Mark A. Nantais President

Attachment File: 54050YTHO_18

Canadian Vehicle Manufacturers’ Association Association canadienne des constructeurs de véhicules

170 Attwell Drive

Suite 400

Toronto, Ontario M9W 5Z5

Tel: 416-364-9333

1-800-758-7122

Fax: 416-367-3221

[email protected]

www.cvma.ca

mailto:[email protected]

mailto:[email protected]

CVMA’s Detailed Comments on the Intentions Paper Clean Transportation; Building a Clean Growth Future for B.C.

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Background

The CVMA and its members take the issues of climate change and air quality seriously. The CVMA members have and continue to invest in the development and deployment of advanced vehicle technologies to reduce greenhouse gases and criteria emissions in the light duty vehicle sector in response to national and North American regulations.

• The light duty and heavy-duty vehicle GHG regulations are driving the adoption of significantly lower year-over-year GHG emission for new vehicles, across all vehicle sizes, types and utility, projecting 50% lower GHG emissions for the light duty vehicle fleet by 2025. The light duty vehicle regulations are currently being reviewed in the U.S. and Canada in terms of future passenger automobiles and light truck emission plans. Vehicle emissions reductions will continue to progress as part of the changes.

• New vehicles are already very clean from a smog-causing emissions perspective and even more stringent emission controls (Tier 3) are being phased-in over the coming years that will reduce smog-causing emissions from the entire new vehicle fleet to virtually zero by 2025.

Vehicle manufacturers have and will continue to make significant improvements to vehicle fuel efficiency and reduce vehicle emissions to meet nationally regulated GHG and criteria performance regulations for many years. Automotive technology is advancing at an unprecedented pace and cleaner more fuel-efficient and safer vehicles are being brought to market in response to shifting consumer demand. Vehicle manufacturers are competing to introduce new and advanced vehicle technologies, with improvements in energy efficiency, reduced fuel consumption and alternative fuels, including electric vehicles, across the new vehicle fleet for all sizes and classification of vehicles. This drive for technology advances and innovation has and will continue to lower greenhouse gases and criteria air pollutants. Currently, BC consumers have more than 30 options of plug-in electric vehicles available, with manufacturers bringing new plug-in electric vehicles to market or expand or replace their model line up over time. Material advancements are also prevalent in newer conventional internal combustion engine (ICE) vehicles.

Vehicle Retirement – A Significant Opportunity

A significant opportunity for action to improve the deployment of cleaner vehicles is not mentioned in the paper –

specifically an accelerated vehicle retirement program. Such a program would allow customers to upgrade to

newer, more efficient, and safer vehicles that meet their utility needs. An accelerated vehicle retirement program

would provide immediate GHG and criteria improvements and cascade these improvements over the long-term,

especially considering that BC’s average fleet age is more than 10 years old1.

An accelerated vehicle retirement program will immediately:

Provide a greater near term opportunity to reduce GHGs from the entire on-road fleet by replacing a large

number of older, less fuel-efficient vehicles

Improve air quality by replacing older high smog-causing emissions generating vehicles

Increase the number of vehicles on road in BC that are capable of using higher blends of renewable fuels

(E15 or B20) or future fuel blends that may be needed for advanced vehicle GHG technologies

1 British Columbia Total Vehicles in Operation for CY 2017, Source: IHS Markit Data


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Retiring older vehicles from the BC on road fleet would also improve BC road safety as new vehicles have

significantly more comprehensive occupant safety systems and vehicle crash avoidance technology.

In BC, new vehicles annually represent about 6-7%2 of the fleet and it will take many years or decades to turn-over

the fleet without an accelerated scrappage program. This is clearly demonstrated by the following data which

shows that the BC vehicle population has continued to age. In the past 5 years, the average age of the BC vehicle

fleet has increased by an additional 0.5 years or over 5% because older vehicles are not being replaced at the rate

of new vehicle introduction.

Table 1: BC Average Vehicle Fleet Age in Years3

Calendar Year 2013 2014 2015 2016 2017

BC Avg. Fleet Age 9.6 9.7 9.9 10.0 10.1

In 2017, when compared to Canada nationwide, the BC Fleet is over 16% older than the Canada average of 8.4

years, with a much higher proportion of vehicles over 20 years of age. See Figure 4.

Reduction of Fleet GHG Emissions from Accelerated Scrappage

The automotive industry has made significant progress in reducing the GHG and criteria emissions from the light

and heavy duty on-road vehicle fleets and will continue to do so over the coming years. The Government of

Canada has mandated a number of extremely stringent regulations to address motor vehicle emissions on a

national basis including:

• On-Road Vehicle and Engine Emission Regulations – Tier 2 – 2004-2016 model years

• Passenger Car and Light Duty Truck GHG Emission Regulations – 2011–2016 model years

• Heavy Duty Vehicle & Engine GHG Emission Regulations – 2014–2018 model years

• Passenger Car and Light Duty Truck GHG Emission Regulations – 2017–2025 model years

• On-Road Vehicle and Engine Emission Regulations – Tier 3 – 2017-2025 model years

• Heavy Duty Vehicle & Engine GHG Emission Regulations – 2019–2027 model years

These federal GHG and criteria emissions regulations require vehicle manufacturers to deploy advanced

technologies to ensure that their fleets will meet the specified fleet performance requirements. At the same time,

vehicle manufacturers are also meeting increasingly more stringent vehicle safety regulations.

Furthermore, as stated in the recent US NPRM, “Individual autonomous vehicles might achieve some emissions

reductions, but the impact may increase as larger number of autonomous vehicles are on the road and can

coordinate and provide system efficiencies.”4

2 British Columbia Total Vehicles in Operation for CY 2017, Source: IHS Markit Data 3 British Columbia Total Vehicles in Operation for CY 2013 to 2017, Source: IHS Markit Data 4 US NPRM August 2, 2018, The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks.


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Figure 1:

The auto industry in Canada has been federally regulated to reduce vehicle greenhouse gas emissions year over

year beginning the 2011 model year (MY), and across the entire range of new passenger cars and light duty trucks.

These very stringent regulations have been adopted on a harmonized basis with the U.S., creating a single and

efficient North American standard (including California) to the benefit of the environment and consumers. Canada

and the U.S. have now implemented the second phase of even more stringent vehicle GHG emissions standards for

2017-2025 MYs.

The unprecedented stringency of the 2017-2025 MY GHG standards require manufacturers to spend an estimated

$200 billion USD in advance vehicle technology development focused on vehicle GHG reductions. These

regulations also require manufacturers to adopt a multi-technology pathway for compliance in which electric

vehicles, plug-in hybrid and battery electric, are becoming increasingly more prominent during this period of rapid

technology deployment of new fuel consumption and GHG reducing technologies. The annual year-over-year

improvement prior the 2011 MY regulation averaged from 1.1% to 1.3% per year. Since 2011, these regulations

require 3 to 5% year-over-year improvements in fleet-wide fuel consumption. This will result in an estimated

cumulative reduction of 266 mega-tonnes (Mt) of carbon dioxide equivalent (CO2e) GHG emissions from the LDV

fleet in Canada.

Motor vehicle fuel efficiency has improved and the resultant greenhouse emissions have decreased due to the

deployment of advanced fuel-saving technologies in newer vehicles. Figure 2 demonstrates that replacing a typical

20-year-old vehicle with a comparable new vehicle will result in a significant GHG reduction due to the fuel

consumption improvements that are designed into new vehicles. Trucks have improved by 30% in the 20-year

period and cars have improved by 19%. Due to the steep slope of the average car and truck fuel consumptions

improvements driven by the 2012 to 2025 light duty vehicle GHG regulations that improvement will further

increase in the coming years. As indicated earlier, U.S. and Canada are both currently reviewing the light duty GHG

regulations for 2021-2025 MY. Regardless of the future regulatory path taken on these regulations, fleet GHG

emissions will continue to decrease with new model introductions and vehicle fleet turn over.


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Figure 2:

The GHGs for the on-road fleet of light duty vehicles represent a relatively small portion of the total inventory in

BC at 16%, and about one-third of all transportation. This contribution will continue to drop as new vehicles

replace the older vehicles in the BC market.


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Figure 3:

An accelerated scrappage program has the benefit of more quickly reducing the fleet contribution, as noted above,

while providing BC consumers with the vehicles that they require to meet their needs.

Reduction of Fleet Smog-Causing Emissions (Criteria) from Accelerated Scrappage

Older vehicles have significantly higher smog-causing emissions in addition to their higher GHG emissions.

Approximately 30% of the British Columbia fleet is greater than 15 years old and do not meet the Tier 2 or the

newly introduced Tier 3 smog related emissions standard (See Figure 4). Therefore, the greatest opportunity for

immediate reductions in smog-causing emissions would be government policies and programs which accelerate

the replacement of these older, higher emitting vehicles.


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Figure 4:

Since the mid-1980s vehicle manufacturers have met increasingly more stringent smog related emission

requirements each year. In 2004, Canada adopted the most stringent national smog related emissions standards

in the world on a harmonized basis with the United States (Tier 2), thereby reducing emissions by 99% from pre-

controlled times. Since 2017, Tier 3 vehicles are being introduced to reduce these small remaining emissions by

yet another 80%. (Figure 5)

Figure 5:


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Importantly, these standards are fuel neutral, which means each vehicle must comply with the same smog related

standards regardless of the fuel used or vehicle size.

The light duty vehicle sector has been the only sector to reduce smog causing criteria emissions year-over-year on

a continuous basis. These virtually zero smog-related emission vehicles are supported in the market place with

further reductions to sulphur in gasoline, or ultra-low sulphur gasoline (10 ppm sulphur), which contribute

significantly to achieving these dramatic vehicle emission reductions. Ultra-low sulphur in gasoline and other fuel

parameter improvements, like higher octane, will also support and enable further GHG-reducing performance

from new internal combustion engine technologies.

The impact on the total Canadian inventory of criteria air contaminant (CAC) emissions has been dramatic. Since

1985, the on-road light duty vehicle sector has demonstrated a sustained and continuous reduction in smog-

causing emissions as older vehicles are retired from the fleet. As of the latest available data the auto sector is now

only approximately 5% of the total Canadian inventory5 of all man-made sources of smog-causing emissions in

2015. (See Figure 6)

Figure 6:

Figure 7 shows that in BC, the older relative age of vehicles on the road demonstrates the opportunity for smog-

causing emissions reduction by replacing those older high emitting vehicles which represent a disproportionate

amount of smog-causing emissions. Those vehicles over 20 years old are responsible for almost 65% of the smog-

causing emissions on a per kilometer driven basis while they represent only 12% of the vehicles in the fleet.

Vehicles 15-20 years old (Tier 1) have emissions at least 2-3 times higher than Tier 2 vehicles and significantly

higher than new Tier 3 vehicles.

5 ECCC Canadian Criteria Air Contaminants Inventory in 2015


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Figure 7: Smog-Causing Emissions based on the age of the BC Fleet 6

Increase of Opportunity to Use Lower Carbon Fuels from Accelerated Scrappage

Over 75% of the on-road light duty vehicle gasoline fleet are certified and validated to operate only on gasoline-

ethanol blends of 10% (E10). New vehicles are now being introduced that are compatible with gasoline-ethanol

blends of 15% (E15). The second topic in the Intentions Paper- Support for Cleaner Fuels - indicates the BC

government’s intention through the low carbon fuels regulations to reduce the carbon content of gasoline and bio-

diesel by increasing the levels of ethanol in gasoline and bio-blends in diesel. Figure 8 below shows that a

significant opportunity exists for the adoption of lower carbon fuels from accelerated vehicle scrappage to replace

older vehicles with new E15 or B20 compatible vehicles.

6 Based on the emissions from Mobile modeling for the vehicles sold in Canada

TVIO = Total Vehicles in Operation


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Figure 8:

New fuel formulations are required for future lower vehicle GHG technologies. These fuels are projected to

include higher octane characteristics. We are encouraged that BC has indicated that it will collaborate with the

federal government through the Pan-Canadian Framework. As transportation affects all jurisdictions, BC, and the

other provinces, need to continue to support the national implementation of advanced emission and GHG

reducing technologies as it is the most cost-effective approach to maximizing emission reductions for governments

and consumers. BC’s fuel/energy policy should align across North America to optimize industry’s ability to

effectively deploy emission reducing technologies in the most cost-effective manner to consumers.

Fuels must continue to be compatible with vehicles – current, legacy and future – to prevent possible emission

degradation or component failures. The risk of exposing BC consumers to potential vehicle and emissions control

system operability and durability issues from exposure to fuels that their vehicles were not designed for will be

reduced as a result of an accelerated scrappage program.

Without vehicle-fuel compatibility, the desired reductions from lower carbon fuels will not be realised.

The CVMA recommends that the government establish an accelerated vehicle scrappage program that

will not only provide significant opportunities to reduce the GHG emissions of the BC light duty vehicle

fleet, but will also provide significant reductions in smog-causing (criteria) emissions, increase the

number of vehicles in the BC fleet capable of using higher renewable fuel blends, and improve

consumer road safety.


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Support and Advancement of Electric Vehicles

Existing BC policies have helped increase the adoption of advanced technologies such as plug-in and hydrogen

vehicles. However, we would caution that future policies which inadvertently result in a delay of new vehicle sales

and extend the life of existing vehicles will compromise environmental benefits and add further challenges to the

timely and cost-effective deployment of advanced emission reducing technologies across the fleet of new vehicles.

As plug-in vehicles continue to be introduced into the market, government-to-consumer purchase incentives remain imperative as these vehicles come with a significant cost premium and consumers must be able to make a value judgement based upon their needs to select the most cost-effective vehicle choices. Beyond cost, electric vehicle technology, requires significant further development in order to address existing challenges in the area of battery cost, energy density, cold weather effectiveness, battery range and life as well as vehicle size and utility limits.

Figure 9:

Source: Based on Multi-State ZEV Action Plan, May 2014

Currently, BC Hydro is responsible for most municipal utilities, power generation and public distribution which provides a unique opportunity for managing the plug-in vehicle infrastructure. With supporting federal funding, BC has added charging infrastructure. However, as the number of plug-in vehicles grows, there will be a continued need for more readily available recharging infrastructure. There are many contributing factors to raising consumer demand for plug-in vehicles which can be grouped into the following key areas:

• Consumer incentives (purchase, charging, parking, HOV access) • Expanded recharging infrastructure (home, workplace, highway network, commercial and

institutional) • Government and Public Policy (fleet purchases, building standards, etc.) • Public Education, Awareness and Outreach


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We support the initiatives outlined in the support for cleaner vehicles, Section 3.1, such as continuation of the successful Clean Energy Vehicle (CEV) incentives, etc. and the recognition of the price gap between plug-in vehicles and gasoline/diesel vehicles. However, setting specific targets (5%) which would trigger the phase-out of the incentive poses some risks since the estimation of price parity with ICEs concurrent with broad market acceptance is dependent on the consumer uptake of these vehicles and not likely to be reached until 2025-2028 according to independent studies.7, 8 Consumer incentives are the primary catalyst for plug-in vehicle sales as illustrated in the following chart. Over 97% of all plug-in vehicle sales in Canada are in the three provinces with consumer incentives. Figure 7 also shows that jurisdictions with government-to-consumer incentives reap the benefits of higher plug-in electric vehicle penetration. Where there are no consumer incentives, plug-in electric vehicles sales are negligible.

Figure 10:

In Ontario, where the Collaborative Electric and Hydrogen Vehicle Advancement Partnership (EHVAP) program was launched in 2017, the growth of plug-in vehicle sales in 2017 and the first half of 2018 grew at a significant rate and closed the gap with Québec which had the highest total plug-in sales across Canada. BC leads in percentage of total industry sales due to the policies and initiatives in place. As evidenced from the Ontario collaborative success, a like program in BC would further increase plug-in vehicle opportunities (see page 14).


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Table 2: IHS Markit Plug-In Sales Registrations

Note: 2018 Sales to June 2018

Introduction of a ZEV Mandate

BC sales of plug-in electric vehicles have been steadily rising. This is because of British Columbia’s comprehensive

set of policies aimed at increasing demand via consumer incentives and supporting consumer adoption though

programs that expand the home, work, and public charging infrastructure as well as public education.

Figure 11:

While plug-in electric vehicles (plug-in hybrid and battery electric vehicles) have the potential to significantly

reduce vehicle GHG emissions, there continues to be technological challenges that need to be overcome. The

utility and functionality of a battery electric vehicle (BEV) is currently limited in cold climates and winter driving

conditions. The more moderate climate in the lower mainland and the southern portion of Vancouver Island is

more suitable for most plug-in vehicles. The same cannot be said for the central and northern interior of BC where

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2016 Sales 2,266 1,485 0.48% 2016 Sales 881 1,303 0.98% 2016 Sales 2,994 2,116 1.10%

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2018 Sales 5,052 4,548 2.25% 2018 Sales 1,608 2,226 3.28% 2018 Sales 4,251 2,948 3.07%

2017/2016 85% 141% 96% 2017/2016 32% 65% 38% 2017/2016 30% 66% 41%

2018/2017 140% 154% 142% 2018/2017 177% 107% 142% 2018/2017 118% 68% 98%


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the distances and geography between major centres as well as the climate provide significant limitations to the use

of plug-in vehicles, and in particular, battery electric vehicles (BEVs). The BC market is a dichotomy of the lower

mainland and Victoria typically characterized by smaller vehicles. On the other hand, the Interior and Northern BC

is geographically more demanding and colder, where, people typically purchase trucks, travelling long distances in

more severe temperature and climatic conditions. The charging infrastructure, different customer needs and

climate need to be taken into policy considerations when looking at what is practical or possible in increasing the

demand for plug-in vehicles across the province.

Consideration of a ZEV mandate would be counterproductive to the success already being achieved in the

province. The paper references Quebec, some U.S. states and other countries with regard to their ZEV policies and

their objectives. These jurisdictions have introduced costly, complex, and burdensome regulations involving sales

mandates that negatively affect dealers, do not dramatically increase EV sales, and can negatively impact

consumers. These ZEV mandate policies have not been proven to be effective in Quebec and the North East States

who have had them in place for some time. There are jurisdictions that have been more successful in introducing

plug-in electric vehicles by doing many of the things British Columbia has already started - without a mandate. For

instance, Norway’s approach has been to focus on creating customer demand by implementing significant

consumer incentives (both direct and indirect) to encourage plug-in vehicle sales and is now a world a leader in

plug-in vehicle sales without a zero-emission vehicle regulation to force consumer choice. Today, the suite of BC

policies and initiatives have resulted in higher consumer plug-in vehicle adoption rate than any other Canadian

jurisdiction.

Consumer uptake of plug-in vehicles is critical and policies need to recognize the consumers’ utility and travel

needs, climatic conditions/operability, and affordability/willingness to pay. Overly ambitious sales weighted

electrification targets, voluntary or mandatory, exceeding the natural consumer uptake of plug-in vehicles may

result in reduction in selection of conventional vehicle choices that fit consumers’ needs. Timelines and

affordability also need to be taken into account by government as more plug-in vehicles and 2nd or 3rd generation

models are introduced in the future with projected lower prices (eventually meeting price parity with ICEs). Goals

for electrification of the fleet that are too ambitious could result in people holding on to their current vehicles

longer. For BC, which already has one of the oldest fleets in Canada, increased vehicle retention will further delay

GHG and smog emissions reductions and safety fleet improvements.

Federal vehicle GHG regulations are designed in a manner which promotes plug-in vehicles to the market,

therefore, we fully support the synergistic consumer market supports outlined in the Intentions Paper continuing

to encourage and support the increased consumer adoption of these technologies.

We note that the paper proposes a requirement that would apply to all new vehicles under 4500 kg or approximately 10,000 lb. This is of serious concern and impractical. Vehicles over 8,500 lb. (3,856 kg) GVWR are designed to meet the needs of industrial, commercial and agricultural customers whose applications require higher payload and towing capacities. These larger vehicles are not practical or viable for battery electrification in the near to medium term due to limitations of battery energy density as well as the range, payload and towing requirements of these vehicles.

The federal vehicle classifications are as follows:

• Passenger cars and light duty trucks up to 8,500 lb. (3,856 kg) GVWR • Medium Duty Passenger Vehicles (MDPVs) up to 10,000 lb. (4,536 kg) GVWR • Heavy Duty Trucks over 8,500 lb. (3,856 kg) GVWR


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More stringent GHG regulations for heavy-duty trucks were also recently published by Canada, May 30, 2018 and continue to build on the previous GHG regulations through 2027 model year. In the following chart you will see that the energy density of batteries versus various gaseous and liquid fuels. Even with the recent advances in battery technology, the energy density for batteries is orders of magnitude below liquid fuels meaning that for a given capacity a battery will need to be many times larger and heavier that a gaseous or liquid fuel system to provide the same capacity and range that other fuels will allow. California understood these limitations and their ZEV regulations are limited to vehicles under 8,500 lb. (3,856 kg) GVWR even without geographical complications.

Figure 12: Comparison of Energy Density for Battery, Gaseous and Liquid Fuels 7

Collaborative Partnership Opportunity

There are other more effective ways to further increase demand for plug-in electric vehicles rather than the many negative consequences of banning or severely limiting specific vehicle technologies in British Columbia. We recommend a partnership approach between the BC government, industry and other stakeholders as a comprehensive way to preserve consumer choice, utility needs, and demand, recognize the impact of a diverse range of climatic and geographic conditions, and achieve the government’s goal of reducing vehicle fleet GHG emissions and increasing plug-in vehicles. In Ontario, a collaborative approach had been delivering results since its inception (Table 2), under the Electric and Hydrogen Advancement Program (EHVAP) which has now come to an end given the new government. Rather than putting in place a prescriptive requirement, a combination of complementary government policies which are outlined in the paper, industry and other stakeholder actions will create the necessary conditions to increase consumer demand for electrified vehicles beyond the current “early adopters”. A Zero Emission Vehicle (ZEV) policy regulating a specific ratio of EVs at rates that exceed the natural consumer uptake of these vehicle technologies will unnecessarily force additional costs on consumers and restrict their ability to purchase the new vehicles that they need to transport people, goods or services. This kind of policy will be counter-productive to the BC’s climate change goals because the sales of new lower emission technology vehicles could be restricted and the replacement of older higher emitting vehicles delayed. The negative impacts for the environment, consumers, dealers, and provincial revenues could be significant if this type of policy is implemented.

7 Data provided by General Motors Engineering


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Due to the size and age of the on-road fleet in BC, it will take significant time and effort to replace the older higher emitting vehicles in the fleet. Acceleration of the adoption rates of lower emission and plug-in vehicles by placing arbitrary requirements on new vehicle sales percentages – in effect quotas – will have negative economic and environmental impacts in British Columbia. However, there are options to encourage the expansion of battery electric, plug-in electric, hydrogen, and alternative fuel vehicles which do not involve the noted risks inherent in the ZEV regulations enacted by some U.S. states or Quebec. The preferred option would be a collaborative and coordinated holistic government-industry partnership approach with on-going education, incentives and consultation to continue the advancements already made in this area. CVMA supports collaborative actions which could entail the following to further increase plug-in vehicles in BC:

• Government: Electrified Vehicle (EV) purchase incentives; Increased EVs in government and private fleets; Increased Charging/Refuelling Infrastructure at Home, Workplaces and on Highways given BC unique position on infrastructure. The government consultation with the Canadian Automobile Association (CAA) and others on optimal programs to retire higher emitting older vehicles.

• Industry: Ongoing annual new light duty vehicle GHG emission improvements; Ongoing expansion of EV product availability; EV Promotion via Advertising; Media; Ride & Drives; Public Education; Dealer EV certification & sales training

• Consumers: EV purchases; Feedback and Consultation on the above. • Other Groups: Education and outreach/awareness

An Advisory Group comprised of a member from Government; OEMs; Dealers; BCAA/CAA; Utilities (i.e. BC Hydro); non-governmental organizations (NGOs) would monitor progress against government goals, issue reports and provide advice on further actions required. The collaborative effort would result in a better outcome. The flow chart (Figure 13) was developed in collaboration with the previous Ontario government to increase the number of plug-in and hydrogen fuel cell vehicles. A similar structure could be adopted by BC to provide an effective mechanism to increase the adoption of advanced technology vehicles in British Columbia.


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Figure 13:

THE COLLABORATIVE PARTNERSHIP MODEL FOCUSED ACTIONS TO ADDRESS ELECTRIC & HYDROGEN VEHICLES

Source: Government of Ontario

Cost to Auto Manufacturers

Today, no auto manufacturers are making a profit on the plug-in vehicles they sell. Even with the higher MSRP of plug-in vehicles when compared to ICE models, manufacturers must shoulder significant losses to put these vehicle in the market. These losses are in the order of magnitude of the Government purchase incentives on these products and in some cases, are much higher. It is not expected that the costs of design, development, validation, production, distribution and marketing of plug-in vehicles will be profitable for at least one, two or more plug-in product generations (5 to 10 years minimum). Some automakers do not currently offer any plug-in vehicles in their product portfolios. Restricting or eliminating ICE product offerings within the market is extreme and has major consequences to consumers when vehicles that meet their needs may no longer be available in the market. All of these options are costly to those manufacturers and ultimately to consumers, and may also create a gray market for vehicles from outside the province to the detriment of all parties. UBS Global Research published a report on 18 May 2017 titled “UBS Evidence Lab Electric Car Teardown – Disruption Ahead?” where they evaluated the Chevrolet Bolt EV by doing a complete teardown and EV cost analysis. The following figures from that report demonstrate that the Bolt EV, an advanced mass market plug-in vehicle available today, comes at a significant loss to the manufacturer (See Figure 14). The second figure shows the UBS estimate of where they think the financial situation for that vehicle will be in the 2025 calendar year.


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Figure 14:

Total Cost of Ownership (TCO) for Consumers

In Figure 15, UBS Global Research8 determined that total cost of ownership parity for consumers will not be achieved in North America until the 2025-2028 timeframe. In the meanwhile, the uptake of EVs in the market will be driven by consumer incentives, including affordable electricity rates that help consumers to offset a portion of the higher cost of PEVs vs comparable ICE vehicles. This is clearly demonstrated in Canada as 97% of new EV sales occurred in the three provinces with consumer incentives – Ontario (until recently), Québec and British Columbia.

8 UBS Global Research Q-Series – UBS Evidence Lab Electric Car Teardown – Disruption Ahead?, page 4


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Figure 15:

EV Impact on Consumers and OEMs

Morgan Stanley Research9 in a paper published in May 2017 forecasts that globally EV sales will reach about 9% by 2025 but that the remaining 91% of new vehicle sales will be internal combustion engine (ICE) equipped but will be under continued market and regulatory pressure resulting in increased costs for OEMs on those products. As the cost of compliance for ICE models goes up so will the burden on OEMs who are currently using the profits from ICE models to cross subsidize the major loss on EV products. The complex interaction between the improving efficiency of ICE products and the cost of plug-in vehicle technology will make consumer choices more difficult in the coming years. The market reality is that until true cost parity is reached and the limitations of charging infrastructure are resolved, significant growth of market share will continue to be challenged. These are issues that a ZEV mandate cannot change and will only further complicate the already complex interactions.

Cost of Carbon Mitigation

Today the cost per tonne of CO2 for the average internal combustion engine vehicle to meet the 2017 to 2025 light duty vehicle GHG regulations was determined to be in the order of $86 to $95 dollars based upon the 2012 analysis done by the EPA and NHTSA (well above the baseline carbon cost in recent auctions). The total cost per tonne including the costs borne by the consumer, government and the manufacturer for plug-in vehicles was calculated in the range of $500 to $600 per tonne for two popular plug-in vehicles sold in Canada – the Chevrolet Volt and Chevrolet Bolt EV. (See Figure 16)

9 Morgan Stanley Research Foundation – Autos & Shared Mobility | Global One billion BEVs by 2050?


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Figure 16:10

The cost of GHG reducing technologies are approximately 3 times the current cost of carbon from recent trading auctions. Electric vehicle technology costs today are around 20 times higher.

10 Bolt EV and Volt analysis based on data from Vehicle MSRP, Incentives and Fuel Consumption Values per NRCan approved methods. Costs of

2017-2015 GHG Regulation based on Table 3.

$35


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In the US Final Rule for 2017 and Later Model Year Light-Duty Vehicles GHG Emissions and CAFE Standards, the National Highway Traffic and Safety Administration (NHTSA) at the time has outlined the following estimates of plug-in hybrid and electric vehicle estimated costs for a mid-size passenger car for 2012-2025 model year.

Table 3: 11

Rather than focusing only on one technology (EVs), supporting the introduction of a broad range of vehicle technologies meeting the more stringent GHG standards provides a more holistic and cost effective approach to GHG emissions reductions and encourages greater innovation and additional approaches that, in combination, will help achieve the environmental objectives of the British Columbia government, while meeting consumers’ transportation needs.

Targets for Electric Vehicle Penetration

The Intentions Paper on page 5 indicates that the BC Government is planning for ZEV targets of 10% by 2025 and 30% by 2030. California who has had a ZEV mandate in place for several decades and has a climate which is more temperate that BC as a whole, concluded in their Advanced Clean Cars Midterm Review12 that the high range of penetration of plug-in vehicles in their market will be 8.2% and approximately 5% in the North East ZEV states. Considering the differences in climate, the bimodal nature of the BC market and relative immaturity of the consumer plug-in market in BC the CVMA believes that BC’s targets are overly optimistic and need to be reevaluated with industry input.

Charging Infrastructure

The following Figure shows the distribution of plug-in vehicles during a typical week of operation. The light green

area demonstrates that vehicles spend the most time stationary at home. The second most popular location

where the vehicle is stationary is at work as shown (red shaded area). This is followed by commercial locations and

church or school shown in yellow. This analysis provides clear demonstration of the priorities that are needed for

charging. Investment in charging infrastructure would be most effective following those priorities.

11 Reference: Federal Register / Vol. 77, No. 199 / Monday, October 15, 2012 – 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas

Emissions and Corporate Average Fuel Economy Standards; Final Rule 12 California’s Advanced Clean Cars Midterm Review, pages A-12 to A-20


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Figure 17:

Data Source - 2001 National Household Travel Survey; GM Data Analysis (Tate/Savagian) - SAE paper 2009-01-1311

Washington State projected the number of charging stations required based on plug-in vehicles in operation for

various cities by taking into account the relative maturity of the plug-in vehicle market. As the market matures and

more plug-in vehicles are in operation they forecast that the number of charging stations per vehicle will gradually

decline. It would be reasonable for BC to follow a similar approach based on their planned number of plug-in

vehicles in operation.


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Table 4:

Data Source: http://www.wsdot.wa.gov/NR/rdonlyres/28559EF4-CD9D-4CFA-9886-

105A30FD58C4/0/WAEVActionPlan2014.pdf

The CVMA recommends and endorses a non-regulatory BC Government collaborative Plug-in Vehicle

Adoption Policy Initiative which includes government, industry, NGOs and other stakeholder groups

to enhance consumer demand for plug-in vehicles, and infrastructure improvements, instead of a ZEV

Mandate which will have significant negative consequences for BC, its citizens, and new vehicle

dealers.

Washington State EV Infrastructure Projections

Cumulative Plug-in Vehicle Sales Seattle Bellingham Olympia Vancouver Total

2011 1,400 80 100 70 1,650

2015 12,700 700 900 600 14,900

2020 87,400 5,100 6,300 4,200 103,000

Cumulative Charging StationsSeattle Bellingham Olympia Vancouver Total

2011 4,200 250 300 200 4,950

2015 30,000 1,750 2,200 1,450 35,400

2020 148,000 8,600 10,700 7,000 174,300

Chargers to Vehicles RatioSeattle Bellingham Olympia Vancouver Total

2011 3.0 3.1 3.0 2.9 3.0

2015 2.4 2.5 2.4 2.4 2.4

2020 1.7 1.7 1.7 1.7 1.7

http://www.wsdot.wa.gov/NR/rdonlyres/28559EF4-CD9D-4CFA-9886-105A30FD58C4/0/WAEVActionPlan2014.pdf

http://www.wsdot.wa.gov/NR/rdonlyres/28559EF4-CD9D-4CFA-9886-105A30FD58C4/0/WAEVActionPlan2014.pdf

the canadian vehicle manufacturers’ association, …...older vehicles have significantly higher...

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