Electric Vehicles and Equipment in Canada: An Appraiser's View
By Dian Kohoutek, CPPA
August 3, 2023
Canada stands at the crossroads of a pivotal moment in its industrial evolution, one that holds the promise of sustainable transportation through the widespread adoption of electric vehicles (EVs). While Canada’s commitment to achieve net-zero emissions by 2050 is ambitious, the journey towards this goal is fraught with challenges that span financial, infrastructural, and technological domains. This are the multifaceted landscape of electric equipment adaptation, exploring the perspectives of industry experts and offering suggestions for comprehensive government action.
The Current Landscape
The transition towards electric equipment in sectors like construction, transportation, and mining is marked by incremental progress. Engagements with industry insiders underline that the realization of medium and heavy-duty electric equipment remains in its fledgling stages. Multiple factors ranging from initial costs, charging infrastructure, technology innovation, and even climate consideration could pose significant hurdles for the transition.
Cost Parity and the Walls of Adoption
While electric equipment offers the allure of a cleaner footprint, the stark reality of elevated upfront expenditures serves as a significant deterrent. Heavy-duty electric trucks and vehicles, priced nearly double their internal combustion engine counterparts, can be a formidable financial barrier. Furthermore, the weight of erecting charging infrastructure is amplified by the challenges posed by diverse weather conditions, particularly in regions characterized by extreme cold. Achieving cost parity with traditional vehicles emerges as a key element for the transformative shift towards sustainability.
Infrastructure: The Foundation of Change
The cornerstone of Canada’s successful electric equipment transition lies in robust charging infrastructure. Presently, the lack of readily available charging stations poses a significant hurdle, particularly for long-haul trucks and heavy-duty equipment used in demanding industries. While large operators can absorb the costs of establishing their charging stations, smaller operators face constraints that limit their ability to embrace electric equipment. Without an expansive and accessible charging network, the realization of the government’s zero-emission target remains elusive.
LNG Trucks: A Tale of Challenges and Lessons
As Canada navigates the terrain of cleaner transportation, the endeavors to promote liquefied natural gas (LNG) trucks serve as a poignant chapter. Despite initial aspirations, the adoption of LNG trucks encountered hurdles that hindered widespread success. One of the big operators in the trucking industry’s experiment with LNG trucks, once hailed as a potential game-changer, encountered unexpected obstacles. The high costs of conversion, coupled with operational expenses and fuel economy challenges, cast a shadow on the technology’s viability.
From an Equipment Appraiser’s Perspective
Just like the initiatives involving LNG trucks, in the current situation, the value of reselling electric vehicles and equipment could see a notable decrease. This is partly due to the limited pool of potential buyers who can opt for previously owned electric vehicles or equipment. With the initial acquisition cost being nearly double that of traditional options, combined with the restricted lifespan of used batteries and the need to develop charging infrastructure for quicker recharging, the appeal of the secondhand market for these units is likely to diminish considerably.
Government Initiatives and the Momentum of Change
Governmental incentives, exemplified by rebates for medium and heavy-duty electric vehicles (MHDVs), signal a positive trajectory. These incentives, although currently localized to provinces like British Columbia and Quebec, act as catalysts for EV adoption. Anchored by substantial funding, the federal rebate initiative aims to bridge the financial gap between electric and combustion-engine vehicles. While these measures foster momentum, the landscape of change is multidimensional, necessitating more comprehensive approaches for enduring impact.
What the Government can do to fully support the commitment?
- Investment in Charging Infrastructure: Beyond rebates and incentives, the government should prioritize the development of a comprehensive charging infrastructure network across the country. Collaborative partnerships with private enterprises, regional governments, and municipalities can help establish a robust network of charging stations that caters to a diverse range of industries and vehicle types.
- Battery Production Facilities: To address concerns over EV costs, the government’s investment in battery production facilities is paramount. A domestic battery production industry can lead to economies of scale, reduced costs, and increased accessibility to critical EV components.
- Incentives for Infrastructure Development: The government should consider introducing incentives and subsidies specifically aimed at supporting the establishment of charging stations. These incentives could encourage private investment and promote the rapid expansion of charging infrastructure.
- Research and Development: Support for research and development initiatives focused on battery technology, charging solutions, and innovative infrastructure deployment methods can accelerate progress and drive technological advancements.
- Regional Variation: Acknowledging regional differences is vital. By tailoring incentives and infrastructure strategies to accommodate varying geographical and industrial needs, the government can facilitate a more equitable and inclusive transition to electric equipment.
Recent Developments
Canada’s commitment to its clean-energy supply chain has taken a significant leap forward. A groundbreaking deal with carmaker Stellantis promises a $3.8 billion joint venture to build an electric vehicle (EV) battery plant in Ontario. The plant, a cornerstone of Canada’s auto sector, aims to supply EV batteries to a significant portion of the North American market. While initial challenges led to the project’s suspension, a finalized deal now includes “performance incentives” of up to $11 billion for Stellantis. The agreement signifies a major stride towards strengthening the EV supply chain and creating job opportunities.
Additionally, a sizeable Volkswagen EV battery cell manufacturing plant in St Thomas is poised to receive incentives of up to $9.7 billion. These developments align with Canada’s goal of fostering a thriving clean-energy ecosystem and parallel efforts in its largest trading partner, the United States.
In conclusion, Canada’s voyage towards electrifying its industries is a complex process, involving all aspects of economic, environmental, and societal considerations. While governmental incentives and investments in battery production facilities form vital threads, the success lies in the establishment of a robust charging infrastructure. By addressing challenges related to cost parity, infrastructure, technology, and implementing tailored government actions, Canada can pave the way for a sustainable, electrified future, turning the dream of net-zero emissions by 2050 into a tangible reality.
To see how electric based equipment can make a difference, you can read about it here.
Sourced:
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