A 2022 Volkswagen ID. 4 EV is shown at a charging station at a Scarborough, Ont. Canadian Tire on Wednesday June 14, 2023.Doug Ives/The Canadian Press
After an unprecedented sales slump in Canada last year, the fortunes of electric vehicles are reversing.
The recent return of the federal $5,000 incentive on certain EVs helped make them more appealing and the impending arrival of previously unavailable EVs from Chinese juggernauts BYD, Chery and Geely is giving drivers hope that an affordable EV (less than $35,000) could be in their future.
But if there’s one thing that gets average commuters thinking about ditching their gas guzzlers, it’s sky-high fuel prices. The price is displayed in glaring neon numbers for all to see. Posted on towering billboards, it hovers over us as we run errands, drive to work and get the kids from school. And when the tank runs low, we pull into one of those neon-numbers filling stations and brace for the final bill. Idly standing there at the pump watching the dollar amount tick up and up and up gives a person time to reconsider their choice of vehicle and ponder bigger questions; what was going through the U.S. president’s head when he started this war, and did he have a plan to end it?
Gas prices spiked because of the U.S.-Israel attack on Iran on Feb. 28 and the retaliation that followed, including the closing of the Strait of Hormuz, through which a fifth of the world’s oil and gas usually flows. If the shutdown persists, there’s no telling how expensive gas could get.
Among many other undoubtedly more consequential things, the conflict is changing the math on EVs.
Drivers in British Columbia are already paying more than $2 per litre. Across Canada, the average retail price for regular gasoline ticked up to $1.97 for the week of May 26 before falling slightly in early June, according to Natural Resources Canada. That’s 49 cents per litre higher than it was in late May last year. Prices are just below the record high average of more than $2 per litre seen in 2022 after Russia’s invasion of Ukraine. Experts predict the brutal gas prices will stick around all summer.
As it stands, a typical car or SUV with a 55-litre tank costs more than $100 to fill with regular gas. A pickup truck with a massive 120-litre tank would set its owner back $236. My local gas station in Toronto is charging $2.26 per litre for premium gas.
On the flip side, EV drivers are saving more money with every kilometre driven on battery power instead of gasoline. Before the federal rebate and gas price spike, buying a Chevrolet Equinox EV instead of the combustion-engine Equinox would save $22,200 in total running costs – over 10 years doing 20,000 kilometres per year – according to a new report by Clean Energy Canada.
Now EV buyers would save $34,100 over the same period. Where the EV previously took five years to pay back its higher upfront cost, now it takes less than three.
Those savings are already helping to win over new EV buyers. In March – with the $5,000 federal incentive combined with the uptick in gas prices – more than 21,000 new zero-emission vehicles (ZEVs) were sold, an increase of 74.7 per cent from one year earlier, according to government data. New ZEVs, which include both EVs and plug-in hybrid vehicles (PHEVs), accounted for 12.2 per cent of total new vehicle sales, compared with 6.5 per cent last March.
It’s a similar story in Europe, where high gas prices have also given a jolt to sluggish EV sales. Registrations of new EVs rose 34 per cent year-over-year in April, Reuters reported.
Sales picked up in the U.S. as well, despite President Donald Trump’s best efforts to crash the EV market. To recap: he has undone fuel economy regulation, ended vehicle emissions standards, cancelled consumer rebates, forced U.S. automakers to take more than US$40-billion in EV-related write downs and dismantled policies that might have helped North America’s auto industry remain globally competitive.
However, by attacking Iran and driving up gas prices, Trump has inadvertently given a boost to EV sales. Citing data from Edmunds, CNBC reported a seven-per-cent jump in people trading in gas cars for EVs over the past four months.
How big of a boost EVs get may depend on how high prices climb and how long they stay there.
Unfortunately, this changing math really only helps those Canadians who are in a financial position to buy or lease a vehicle. For many, it doesn’t make sense to get out of a lease early or sell a paid-for gas car and spend $50,000 on a new EV in order to save some money every month. For those drivers, there is little choice but to endure the pain and squeeze the nozzle. This war and high gas prices are only adding to Canadians’ financial woes.