Automotive
Federal government EV mandates destined to fail
From the Fraser Institute
By Julio Mejía, Elmira Aliakbari, and Jason Clemens
According to reports, the Trudeau government will soon unveil regulations meant to phaseout the sale of new internal combustion vehicles and compel Canadians to buy zero-emission vehicles. The Biden administration is also mandating a similar shift. But these initiatives overlook two realities—consumer preferences are not easily swayed by top-down government directives, and the unrealistic timeline for minerals crucial for electric vehicles (EV) raises serious doubts about the likelihood of success.
Specifically, according to the Trudeau government’s new regulations, all new passenger vehicles and light trucks sold in Canada must be electric zero-emission vehicles by 2035, with interim targets of 20 per cent by 2026 and 60 per cent by 2030. And the Biden administration has mandated that two-thirds of new vehicles sold in the United States must be electric by 2032.
And yet, despite multibillion-dollar subsidies and governmental efforts to promote EV adoption, consumers are not embracing them. In Canada, only 6.5 per cent (98,589) of the 1.5 million new vehicles sold in 2022 were electric, according to Statistics Canada. Achieving the Trudeau government’s 2026 target would require a rapid increase in EV sales to more than 300,000 in coming years and more than 900,000 in 2030 (assuming no change in total vehicle sales). Such rapid growth in a short timeframe is at best questionable.
South of the border, data from the U.S. Department of Energy indicates that, out of 283.5 million registered vehicles in 2022, EVs comprised a mere 0.9 per cent of total vehicle registrations. In response, automakers are making strategic business decisions. Ford, for example, is delaying the construction of $12 billion worth of EV production facilities, citing a lack of consumer demand. Similarly, General Motors is abandoning the goal of producing 400,000 EVs by mid-2024 due to lower-than-expected sales.
But even in the unlikely scenario of sudden shift in consumer preferences, production-side barriers loom large. For example, the extraction (i.e. mining) of lithium, nickel, manganese, cadmium, graphite, zinc and other rare-earth elements necessary for EVs requires a rapid and marked expansion.
According to a recent study, to meet international EV adoption mandates (including mandates in Canada and the U.S.) by 2030 the world would need 50 new lithium mines, 60 new nickel mines, 17 new cobalt mines, 50 new mines for cathode production, 40 new mines for anode materials, 90 new mines for battery cells, and 81 new mines for EV bodies and motors, for a total of 388 new mines worldwide. For context, in 2021 there were only 340 metal mines operating in Canada and the U.S.
And historically, the development of mining and refining facilities has been slow. Production timelines range from six to nine years for lithium and 13 to 18 years for nickel—two elements critical for EV batteries. The aggressive government timelines for EV adoption clash with historically sluggish metal and mineral production, raising the risk of EV manufacturers falling short of needed minerals.
Not only are consumers resistant to top-down regulations, but the ambitious short-term EV adoption mandates in Canada and the U.S. are on a collision course with the reality of metal and mineral production capacity. Simply put, it’s not at all clear that sufficient capacities will be available to produce enough EVs to achieve the mandates being imposed on Canadians and Americans, nor is it clear consumers in either country are willing to spend their own money to purchase them.
Authors:
From the Fraser Institute
During his victory speech Monday night, Prime Minister Mark Carney repeated one of his favourite campaign slogans and vowed to make Canada a “clean energy superpower.” So, Canadians can expect Ottawa to “invest” more taxpayer money in “clean energy” projects including electric vehicles (EVs), the revolutionary transportation technology that’s been ready to replace internal combustion since 1901 yet still requires government subsidies.
It’s a good time for a little historical review. In 2012 south of the border, the Obama administration poured massive subsidies into companies peddling green tech, only to see a vast swath go belly up including Solyndra, would-be maker of advanced solar panels, which failed so spectacularly CNN called the company the “poster child for well-meaning government policy gone bad.”
One might think that such a spectacular failure might have served as a cautionary tale for today’s politicians. But one would be wrong. Even as the EV transition slammed into stiff headwinds, the Trudeau government and Ontario’s Ford government poured $5 billion in subsidies into Honda to build an EV battery plant and manufacture EVs in Ontario. That “investment” came on top of a long list of other “investments” including $15 billion for Stellantis and LG Energy Solution; $13 billion for Volkswagen (or $16.3 billion, per the Parliamentary Budget Officer), a combined $4.24 billion (federal/Quebec split) to Northvolt, a Swedish battery maker, and a combined $644 million (federal/Quebec split) to Ford Motor Company to build a cathode manufacturing plant in Quebec.
How’s all that working out? Not great.
“Projects announced for Canada’s EV supply chain are in various states of operation, and many remain years away from production,” notes automotive/natural resource reporter Gabriel Friedman, writing in the Financial Post. “Of the four multibillion-dollar battery cell manufacturing plants announced for Canada, only one—a joint venture known as NextStar Energy Inc. between South Korea’s LG Energy Solution Ltd. and European automaker Stellantis NV—progressed into even the construction phase.”
In 2023, Volkswagen said it would invest $7 billion by 2030 to build a battery cell manufacturing complex in St. Thomas, Ontario. However, Friedman notes “construction of the VW plant is not scheduled to begin until this spring [2025] and initial cell production will not begin for years.” Or ever, if Donald Trump’s pledge to end U.S. government support for a broad EV transition comes to pass.
In the meantime, other elements of Canada’s “clean tech” future are also in doubt. In December 2024, Saint-Jérome, Que.-based Lion Electric Co., which had received $100 million in provincial and government support to assemble batteries in Canada for electric school buses and trucks, said it would file for bankruptcy in the United States and creditor protection in Canada. And Ford Motor Company last summer scrapped its planned EV assembly plant in Oakville, Ontario—after $640 million in federal and provincial support.
And of course, there’s Canada’s own poster-child-of-clean-tech-subsidy failure, Northvolt. According to the CBC, the Swedish battery manufacturer, with plans to build a $7 billion factory in Quebec, has declared bankruptcy in Sweden, though Northvolt claims that its North American operations are “solvent.” That’s cold comfort to some Quebec policymakers: “We’re going to be losing hundreds of millions of dollars in a bet that our government in Quebec made on a poorly negotiated investment,” said Parti Québécois MNA Pascal Paradis.
Elections often bring about change. If the Carney government wants to change course and avoid more clean-tech calamities, it should pull the plug on the EV revolution and avoid any more electro-boondoggles.
Kenneth P. Green
Senior Fellow, Fraser Institute
MxM News
Quick Hit:
Major automakers are urging Congress to intervene and halt California’s aggressive plan to eliminate gasoline-only vehicles by 2035. With the Biden-era EPA waiver empowering California and 11 other states to enforce the rule, automakers warn of immediate impacts on vehicle availability and consumer choice. The U.S. House is preparing for a critical vote to determine if California’s sweeping environmental mandates will stand.
Key Details:
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Automakers argue California’s rules will raise prices and limit consumer choices, especially amid high tariffs on auto imports.
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The House is set to vote this week on repealing the EPA waiver that greenlit California’s mandate.
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California’s regulations would require 35% of 2026 model year vehicles to be zero-emission, a figure manufacturers say is unrealistic.
Diving Deeper:
The Alliance for Automotive Innovation, representing industry giants such as General Motors, Toyota, Volkswagen, and Hyundai, issued a letter Monday warning Congress about the looming consequences of California’s radical environmental regulations. The automakers stressed that unless Congress acts swiftly, vehicle shipments across the country could be disrupted within months, forcing car companies to artificially limit sales of traditional vehicles to meet electric vehicle quotas.
California’s Air Resources Board rules have already spread to 11 other states—including New York, Massachusetts, and Oregon—together representing roughly 40% of the entire U.S. auto market. Despite repeated concerns from manufacturers, California officials have doubled down, insisting that their measures are essential for meeting lofty greenhouse gas reduction targets and combating smog. However, even some states like Maryland have recognized the impracticality of California’s timeline, opting to delay compliance.
A major legal hurdle complicates the path forward. The Government Accountability Office ruled in March that the EPA waiver issued under former President Joe Biden cannot be revoked under the Congressional Review Act, which requires only a simple Senate majority. This creates uncertainty over whether Congress can truly roll back California’s authority without more complex legislative action.
The House is also gearing up to tackle other elements of California’s environmental regime, including blocking the state from imposing stricter pollution standards on commercial trucks and halting its low-nitrogen oxide emissions regulations for heavy-duty vehicles. These moves reflect growing concerns that California’s progressive regulatory overreach is threatening national commerce and consumer choice.
Under California’s current rules, the state demands that 35% of light-duty vehicles for the 2026 model year be zero-emission, scaling up rapidly to 68% by 2030. Industry experts widely agree that these targets are disconnected from reality, given the current slow pace of electric vehicle adoption among the broader American public, particularly in rural and lower-income areas.
California first unveiled its plan in 2020, aiming to make at least 80% of new cars electric and the remainder plug-in hybrids by 2035. Now, under President Donald Trump’s leadership, the U.S. Transportation Department is working to undo the aggressive fuel economy regulations imposed during former President Joe Biden’s term, offering a much-needed course correction for an auto industry burdened by regulatory overreach.
As Congress debates, the larger question remains: Will America allow one state’s left-wing environmental ideology to dictate terms for the entire country’s auto industry?
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