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MEI Warns of EV Quotas

The Montreal Economic Institute (MEI) says we will all pay the price for electric vehicle quotas.

According to the Montreal Economic Institute, a not-for-profit research organization, the electric car sales quotas imposed on manufacturers (starting with 2018 models) by the Quebec government will eventually increase the marginal cost of conventional vehicles by $1,100.

Most car makers will have to accumulate a number of “credits” equal to 3.5% of their sales, increasing gradually to 22% in 2025. Carmakers that fall short will have to buy the credits they’re missing.

“It is likely that carmakers will fall short of these targets, especially since the quota of 3.5% for 2018 is above the present share of total motor vehicle sales that are electrics and hybrids, which stands at 1.08%,” said Germain Belzile, Senior Associate Researcher at the MEI.

These quotas, argues the MEI, will therefore increase the marginal cost of a conventional vehicle, and so the price that consumers will pay will also increase. According to the MEI, at 3.5% the increase in the marginal cost will be $175 in 2018, but as the quota increases to 22% by 2025, that extra cost will increase to $1,100 per vehicle.

“This extra cost will put upward pressure on car prices in Quebec and reduce car sales. This de facto tax is in fact a regressive one, since poorer households wanting to buy cheaper vehicles will face relatively steeper price increases than households with higher incomes acquiring more luxurious vehicles,” said Belzile.

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august, 2021

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