EY: More than half of Canadians considering electric vehicle purchase

More than half  of Canadians (52%) are considering purchasing a fully electric, plug-in hybrid, or hybrid vehicle in the next few years, according to EY’s latest mobility consumer index.

As Canadians face steep cost-of-living increases, rising fuel price was the top motivator for switching to an EV (49%), followed by environmental concerns (40%), cost-of-ownership (24%), and monetary incentives (23%).

The 52% of Canadians considering an EV (up 6 points from last year) was below the global average of 55%. Ontario respondents were keenest (59%), while Albertans had the lowest interest (40%).

Surveys on EV purchasing intentions tend to suffer from a high degree of social desirability bias. Respondents may also want to buy an EV, but a host of factors prevent the actual purchase. Good intentions may not mean a whole lot on the car lot.

Digging into actual sales figures, 9.6% of new light-duty vehicle registrations in Q4 2022 were zero-emission vehicles (fully electric and plug-in hybrid), according to StatsCan – up from 6.2% the prior year. The federal government is hoping to bump ZEVs to 20% of new registrations by 2026 and 100% by 2035. That’s a lofty goal, short of a blanket ban.

EVs are much more expensive than internal combustion engine (ICE) cars, with the average price of an EV at US$56,000 compared to the overall industry average of US$46,000, according to Kelley Blue Book. Consumers can’t easily purchase a “budget” electric vehicle, but well-heeled drivers can buy a Tesla to signal their status.

High inflation and steeper borrowing costs make an EV purchase even tougher for prospective buyers who are squeezed by skyrocketing rents and home prices instead of being the beneficiaries of such increases – like a Tesla-driving landlord.

Limited inventory and extensive wait times are another impediment, as EV manufacturers struggle with materials availability and limited production capacity.

Finally, consumers without excess capital might question whether they will save US$10,000 in gas over the lifetime of the car – especially if a costly battery replacement may be required – or why such a purchase matters when transport trucks, factories, and airplanes are sticking to ICE. Lack of range and charging infrastructure might also make an EV purchase less palatable for rural consumers.

Upfront costs remained the top inhibitor to EV purchases for Canadian respondents, at 44%, followed by limited battery range (35%), limited electric vehicle charging stations (24%), and expensive battery replacements (24%).

“The rising cost of living is showing consumers that buying an EV is a more viable, sustainable option,” said Jennifer Rogers, automotive and transportation leader at EY Canada. “But as fuel prices gradually subside and we return to more favourable and affordable economic conditions, the challenge for manufacturers will be maintaining this momentum and making sure that interest in electric cars persists down the road. Collaboration between manufacturers, energy companies, and governments at all levels will be key to meeting drivers’ needs while progressing along the national energy transition.”