Electric Vehicle Availability Standard: Updated estimates based on recent policy developments

Based on recent policy developments, this note provides updated estimates of how the relative ownership costs of zero-emission vehicles (ZEVs) and internal combustion engine (ICE) vehicles may need to adjust to meet the ZEV sales targets under the Electric Vehicle (EV) Availability Standard by 2030.

With the removal of fuel charges and assuming that the Incentives for Zero-Emission Vehicles (iZEV) program expires after 2025, we estimate that the relative ownership cost of battery-electric vehicles (BEVs) would need to decrease by 33 per cent to meet the ZEV sales target of 60 per cent in 2030 under the EV Availability Standard, compared to 31 per cent estimated in our August 2024 report.
With the removal of fuel charges and assuming a broad extension of the iZEV program beyond 2025, we estimate that the relative ownership cost of BEVs would need to decrease by 29 per cent to meet the ZEV sales target of 60 per cent in 2030 under the EV Availability Standard.

In August 2024, Parliamentary Budget Officer (PBO) published a report estimating that the relative ownership cost of battery-electric vehicles would need to decrease by 31 per cent to meet the ZEV sales target of 60 per cent in 2030 under the EV Availability Standard. The estimated cost adjustment was based on the assumption that preferences, technology and policies (as of August 2024) would remain unchanged from a baseline scenario without the standard.[^1] This additional analysis provides updated estimates based on recent policy developments affecting the relative ownership cost of BEV and ICE vehicles.

PBO’s 2024 report assumed that the federal fuel charge would evolve in line with scheduled increases through 2030[^2] and that the iZEV rebate program would expire after 2025.[^3] Following publication of our report, the Government removed the federal fuel charge (effective April 1, 2025), along with the requirement for provinces and territories to have a consumer‑facing carbon price. More recently, the Minister of Industry indicated that the Government will be bringing back the iZEV program that provided ZEV buyers with purchase rebates of up to $5,000.[^4]

Figure 1 shows how these policy developments could impact the adjustment in relative ownership costs required to meet the ZEV sales target of 60 per cent in 2030 under the standard. Given that the policy parameters of the iZEV program have not been specified, for illustration, we have assumed the broadest eligibility criteria for the rebates; that is, all new BEV vehicles purchased in 2025 and thereafter would receive a $5,000 rebate.[^5]

The removal of federal and federal-equivalent fuel charges[^6] reduces the ownership cost of an ICE vehicle relative to BEVs through lower annual operating costs. With the removal of fuel charges (and maintaining the assumption that the iZEV program would expire after 2025), we estimate that the relative ownership cost of BEVs would need to decrease by 33 per cent to meet the ZEV sales target of 60 per cent in 2030 under the standard, compared to 31 per cent estimated in our August 2024 report (Figure 1).

The $5,000 iZEV rebate, by contrast, would directly reduce the purchase price of a zero-emission vehicle. With the removal of fuel charges and assuming a broad extension of the iZEV program beyond 2025, we estimate that the relative ownership cost of BEVs would need to decrease by 29 per cent to meet the ZEV sales target of 60 per cent in 2030 under the standard (Figure 1).[^7]

Change in ownership cost of BEVs relative to ICE vehicles required to meet ZEV sales targets under the EV Availability Standard

Office of the Parliamentary Budget Officer.

For each year, estimated impacts show the percentage difference between the relative ownership cost of BEVs to ICE vehicles under the standard and the relative ownership cost of BEVs to ICE vehicles in the baseline scenario without the standard. Estimates assume preferences, technology and policies (with the exception of fuel charges and the iZEV program) remain unchanged from a baseline scenario without the standard. Relative cost adjustments and increases in chargers alone ensure that ZEV sales targets are met under the standard.

Charger supply projections are essentially unchanged from our previous report, which indicated that achieving the ZEV sales targets under the EV Availability Standard would increase the market supply of L2 and L3 (fast) charging ports by 33,900 and 4,700 units, respectively, above baseline levels in 2030. Our estimated increase in charger supply is somewhat less than what is required according to a recent needs analysis commissioned by Natural Resources Canada.

Table 1 provides estimates of the baseline purchase, operating and total ownership costs of ICE and BEV vehicles. Following discussions with external researchers, we revised our baseline maintenance cost assumptions from the August 2024 report.[^8] Given the relative nature of the analysis and model calibration, the revised baseline maintenance cost assumptions do not have a material impact on our estimates of the relative cost adjustment and charger supply under the EV Availability Standard.