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5 year payback estimate for EV battery-maker subsidies off by 15 years! – PBO

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From the Fraser Institute

Ottawa’s super-charged EV obsession reaches new heights

Every week, it seems, we get another report revealing the deep thoughtlessness and fiscal recklessness of Ottawa’s electric car and electric-car battery fixation. For example, the Parliamentary Budget Officer recently asked how long it will take for the federal government to see a return on the $28.2 billion of production subsidies to EV battery-makers Stellantis and Volkswagen. The answer—about four times longer than government originally claimed.

Remember, Prime Minister Trudeau said the “full economic impact of the project will be equal to the value of government investment in less than five years.” But according to the PBO, it will take 20 years, not five years, to merely recover the money the government “invested” on behalf of Canadians. There’s no actual profit to be had at that point.

Why the discrepancy?

To figure that out, the PBO looked into the government’s modelling used to generate its “five-year” payback scenario and found that the government’s estimate included numerous assumptions about other investments (and assumed production increases) outside the direct battery-making process including assumed capability in battery-material production, which is shorthand for mining and refining of critical metals and minerals needed to make EV batteries. Of course, this is a notoriously uncertain proposition given Canada’s dismal performance in bringing new mining-related infrastructure projects with EV-battery potential to fruition.

In fact, as the PBO notes, of the total “investment package” government modelled in calculating its “payback” date, only 8.6 per cent was directly related to battery production at the Volkswagen plant. More than 90 per cent was based on assumptions about developments outside of the subsidized battery-makers purview or control.

By contract, the PBO’s modelling of the investment cost-recovery focused only on “government revenues generated by cell and module manufacturing, upon which the production subsidies are based.” And unlike the government’s analysis, the PBO analysis starts when production is actually expected to begin at the new battery plants, which is not until sometime next year.

And yet, the PBO analysis remains quite generous as it excluded “public debt charges that would be incurred to finance the production subsidies” and simply accepted estimates of production capability by Stellantis and Volkswagen.

Clearly, the Trudeau government’s EV crusade is textbook bad public policy where the government attempts to pick winners and losers in the economy, in this case dependent on fanciful scenarios of future developments in global markets far outside Canada’s control. The crusade is also out of step with developments in the largest likely market for Canadian EVs and EV products—the United States, where car buyers are increasingly rejecting EVs despite heavy subsidies and massive government spending initiatives to promote EV manufacturing.

Governments in North America have been trying to push EVs over internal combustion vehicles for 30 years now, and it has not worked. EVs have consistently failed to compete with combustion vehicles on performance and cost, and failed to win broad consumer support despite oceans of government subsidies for manufacturers and buyers alike. It’s long past time for government to take off its rose-coloured glasses on the EV transition. There are better uses for government’s time and money. Getting people’s food and housing costs down, for example, might be a good place to start.

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Frontier Centre for Public Policy / 2 hours ago

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Automotive

Current EV strategy charging ahead to failure

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Dan McTeague  Written By Dan McTeague

For years now I’ve been saying that electric vehicles, and EV mandates, are bad for Canada.

Back in 2020, when the then-CEO of Toyota, Akio Toyoda, voiced his concerns that governments were moving too fast in their push for an all-electric car market when there were other good options available which didn’t require the same multi-billion dollar infrastructure overhaul or increase in electricity generation, I asked why we weren’t listening to a man who knows his own business.

When Europe found itself in an energy crisis in the winter of 2022, and the Swiss government asked its citizens to avoid driving their EVs, even considering an outright ban, to protect their fragile electricity grid, I said that with our already-strained grid we were seeing our future playing out before us in Switzerland and mandates or no, consumers just wouldn’t stand for it.

And more recently, as stories have piled up of EVs’ vulnerability to the cold — “We got a bunch of dead robots out here,” as one frustrated EV owner put it, surrounded by frozen EVs that had run out of juice while waiting for a charge in a cold snap — I’ve asked over and over again, why on earth our government is trying to force the large scale adoption of an automobile technology which functions so poorly in a normal Canadian winter.

I take no pleasure in being proved right, but nearly every day brings about a new story of EVs failing to meet the lofty expectations our leaders have set for them.

  • Recent headlines have trumpeted the difficulties EV drivers are having getting their cars fixed, because so few mechanics know how to work on them.
  • People are finding that the resale value of their EV is falling at a much faster rate than their neighbour’s reliable internal combustion engine vehicle.
  • Rental car companies like Hertz have been taking major losses after over-investing in EVs, that no one wants to rent. Apparently people don’t like the idea of pinning their vacation on a car they might not be able to charge.
  • And major auto manufacturers have been significantly scaling back their annual EV production, despite impending mandates which will force consumers to buy their product in just over a decade.

Even with the generous government subsidies handed to Ford in order to produce made-in-Canada electric SUVs, that company has decided to push their release date for the vehicles back two years — a decision that means layoffs for the majority of the 2,700 workers at the plant, according to the Globe and Mail. GM has followed suit, with recent  reports  claiming that they are “having a second look” at plans to build EV motors at their plant in St. Catherines, Ontario.

Those companies are beginning to accept reality, something various nations around the world have started to do, as well. The U.K., Germany, Italy, and other European countries, as well as the U.S., have had resistance to EV mandates play a big role in their politics lately. The Biden campaign was even forced to issue a statement saying, “There is no ‘EV mandate,’” after Donald Trump predicted to Detroit autoworkers that the White House’s pro-EV policies would put them out of work.

In the face of all of this, the Trudeau government continues to double down, reaffirming mandates and shovelling more and more tax dollars into the EV fire.

They should know better.

And maybe they do.

But maybe the dollars and the promises to their activist friends have just gotten so big that they feel like they can’t change course now.

Or maybe they are just too stubborn to admit that people like me were right all along, that they bet big and they bet wrong. And they can’t say they weren’t warned.

Buckle up.

Dan McTeague is President of Canadians for Affordable Energy

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Economy

Carbon tax costs Canadian economy billions

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From the Canadian Taxpayers Federation

Author: Franco Terrazzano 

This tax costs Canadians big time at the gas pump, on home heating bills, on the farm and at the dinner table.

The Canadian Taxpayers Federation is calling on the federal government to scrap the carbon tax in light of newly released government data showing the tax will cost the Canadian economy about $25 billion in 2030.

“Once again, we see the government’s own data showing what hardworking Canadians already know: the carbon tax costs Canada big time,” said Franco Terrazzano, CTF Federal Director. “The carbon tax makes the necessities of life more expensive and it will cost our economy billions of dollars.

“Prime Minister Justin Trudeau must scrap his carbon tax now.”

The government of Canada released modelling showing the cost of the carbon tax on the Canadian economy Thursday.

“The country’s GDP is expected to be about $25 billion lower in 2030 due to carbon pricing than it would be otherwise,”  reports the Globe and Mail.

Canada contributes about 1.5 per cent of global emissions.

Government data shows emissions are going up in Canada. In 2022, the latest year of data, emissions in Canada were 708 megatonnes of CO2, an increase of 9.3 megatonnes from 2021.

The federal carbon tax currently costs 17 cents per litre of gasoline, 21 cents per litre of diesel and 15 cents per cubic metre of natural gas.

The carbon tax adds about $13 to the cost of filling up a minivan, about $20 to the cost of filling up a pickup truck and about $200 to the cost of filling up a big rig truck with diesel.

Farmers are charged the carbon tax for heating their barns and drying grains with natural gas and propane. The carbon tax will cost Canadian farmers $1 billion by 2030, according to the Parliamentary Budget Officer.

“No matter how many times this government tries to put lipstick on the carbon tax pig, the reality is clear,” said Kris Sims, CTF Alberta Director. “This tax costs Canadians big time at the gas pump, on home heating bills, on the farm and at the dinner table. Trudeau should make life more affordable and improve the Canadian economy by scrapping his carbon tax.”

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