When Electric Car Incentives Expire: A Case Study In CanadaWhen Electric Car Incentives Expire: A Case Study In Canada

British Columbia [image: Wikimedia Commons]
In February, the Canadian province of British Columbia became one of few areas of the world to allow its plug-in electric vehicle purchase incentives to expire.
The cause was simple: The initial allocation of funds ran out, and the incentive was not renewed with further funding.
Five months of vehicle registration data later, electric-car advocates can estimate how the expiration of incentives impacted plug-in sales.
DON’T MISS: Plug-in Electric Car Sales in Canada, Aug 2014: Vive Le Volt
We can compare British Columbia sales figures with those of Ontario and Quebec, two provinces that have maintained their incentive programs.
The table below shows the three provinces’ programs, and how they compare with initiatives from the U.S. federal government and the state of California.
Effect of BC plug-in car purchase incentive expiring in Feb 2014 [image: Matthew Klippenstein]
(It must be noted as well that the BC government also incentivized businesses to install hundreds of publicly-accessible charging stations around the province.)
Lost incentives cost sales
Since BC’s incentive program ended, combined Leaf and Volt sales have risen slightly. In the five months after incentives expired, 100 new Leafs and Volts were registered in the province, against 90 in the prior five-month period.
Meanwhile, registrations of those two vehicles in Ontario and Quebec more than doubled in the same period, from 546 to 1238.
Though sales in BC rose in absolute terms, the province’s share of sales has fallen, compared to the two provinces where incentives remain.
While incentives were in place, the ratio of Leaf and Volt sales in Ontario and Quebec to British Columbia was about 6 to 1. Since the program expired, it’s been 12 to 1.
Effect of BC plug-in car purchase incentive expiring in Feb 2014 [image: Matthew Klippenstein]
These two vehicles can serve as a proxy for the Canadian market, as they represent more than half of tracked plug-in electric vehicle sales in the country.
Thus we can tentatively conclude that the loss of incentives caused electric-car sales to be only half as high as they would have otherwise been.
MORE: China Adds Even More Electric-Car Incentives–Mostly For Local Brands
Stated in a more positive light, the province’s rebate program roughly doubled the rate of electric-vehicle uptake.
So much for the claim that incentives go solely to people who would have bought electric cars anyway, eh?
Again, though, the message is that plug-in electric vehicle sales in British Columbia have continued to rise slightly since the province’s incentives expired.
Smart Electric Drive, University of British Columbia campus, Vancouver [pohto: Matthew Klippenstein]
But the numbers suggest that sales in BC would have been twice as high as they are today, if incentives had remained.
Yes, Virginia, incentives open markets
Critics and cynics alike have claimed that incentives are an ineffective use of public funds, because they benefit early-adopters who would’ve purchased electric vehicles anyhow.
Many different public-policy researchers are carefully studying their efficacy, including a pioneering effort by a Saudi research center. British Columbia’s experience can now add to this discussion.

British Columbia [image: Wikimedia Commons]
If all plug-in purchasers in BC were price-insensitive early-adopters, we would have expected plug-in sales trends to have kept pace with the trends in Ontario and Quebec, despite a price increase of up to $5,000 caused by the expiration of incentives.
This isn’t what happened.
But if plug-in electric cars are bought by pragmatic, budget-constrained buyers, we might reasonably expect a $5,000 price increase to translate to sales 30 to 50 percent lower than the trends would suggest. And by and large, this is what happened.
ALSO SEE: Electric-Car Market Share In 2013: Understanding The Numbers Better
Last year, in the $25,000 to $40,000 price range, the size of the car market as a whole shrank by 40 percent with each $5,000 increase in base-model sticker price.
Effect of BC plug-in car purchase incentive expiring in Feb 2014 [image: Matthew Klippenstein]
While this was a rough analysis, and that Canadian car buyers may not behave as American ones do, the 30 to 50 percent reduction seems to fit with those numbers.
Put differently, the sales pace over the last 10 months–lower than what would have been expected if BC’s incentives had continued–suggests that the program’s main beneficiaries were “regular” car-buyers for whom the economics now worked.
Presumably, early adopters in the province who were insensitive to cost had long since claimed their own rebates.
Canadian electric-car advocates can’t claim to know exactly how all these factors interacted with each other, but incentives will be a main topic of discussion at the community’s annual EV/VE conference, October 28-30 in Vancouver. (My apologies for the shameless plug; your contributor volunteered on one of the planning committees.)
Sun Country Highway electric-car charging station, Burnaby, BC, Canada [photo: Matthew Klippenstein]
Hey, how about Tesla?
Not enough time has passed to draw meaningful conclusions about monthly Tesla Model S registrations in each province.
And given the Tesla’s luxury price level, its buyers are likely less price-sensitive than those of Nisan Leafs, Chevy Volts, and other lower-priced plug-in electric cars.
Because demand for Tesla’s flagship product outstrips supply–yet another part of the Apple business model Musk & co. appear to have successfully copied–Canadian customers can still wait three months for delivery of their models.
This means that cars sold in February, before incentives expired, may not have been delivered (and hence registered) until May. That month, 11 new Tesla Model Ses were registered in British Columbia–followed by 46 in June, and then another 15 in July.
The June results suggest Fremont may have had a backlog of orders from buyers rushing to buy Teslas before incentives expired in February. On the other hand, the company could simply have been making headway then against its March purchases as well.
Still, we can reasonably suspect that July is the first month of vehicle-registration data to reflect only Model S cars sold after the expiration of incentives. (At time of writing, August registration data isn’t available yet.)
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