Subsidies are necessary – look what happened in Ontario
In my line of work, I get a lot of mail.
If I write about Formula One, half the people who write congratulate me on my insight and the other half think I should be fired. Some of my critics use some rather colourful language.
For instance, I didn’t know that Max Verstappen is now known as the “Dutch punk.” And that his world championship should have an asterisk attached.
Gee, I thought, if that’s true then Juan Fangio, Ayrton Senna, Alain Prost and Michael Schumacher (multiples) should have asterisks attached to their championships, too.
Oh, and Lewis Hamilton didn’t escape, either, although I won’t repeat what some people think of him.
The other subjects that get the juices flowing are electric vehicles and the future of transportation. I think EVs make sense but there are challenges (EV drivers had a devil of a time holding a charge during the recent cold snap, for example) and while mass transit (ride-share, Ubers, subways) is great in theory, it has problems in practice.
But what do I know? In the end, there are very few people who really know. But they are out there and I was lucky enough in recent weeks to interview one of them.
Before I get rolling, it is best to remember that I write an 800-word newspaper column, not a PhD thesis. For those who want to learn more, I will link to a study collated by Ryan Robinson, the automotive research leader of the Global Automotive Sector at Deloitte LLP.
The 2022 Global Automotive Consumer Study is the 13th Deloitte has conducted. It involves 26,000 consumers in 26 countries. This year’s study focused on four key trends and found:
- The willingness of consumers to pay for advanced technologies remains limited;
- Interest in electric vehicles is driven by lower running costs and better experience;
- In-person purchase experiences are still preferred;
- Personal vehicles continue to be the preferred mode of transportation.
Let’s start by looking at the first and third items, which are pretty obvious. Every new car, for instance, has an improvement in infotainment. What was once optional, is now standard. Consumers, knowing this, are happy to wait for a year or two rather than pay extra to get the new technology now.
And the news is good for traditional auto dealerships. Although some manufacturers have spent millions on digital interactive presentations, Deloitte’s study suggests consumers still prefer to go into a dealership and have salespeople tell them what’s good about a particular model (before the haggling begins).
The fourth item deals with personal transportation.
“Any time you have shared transportation, taxi services and such, or something more traditional like public transportation, obviously because of the health concerns around the pandemic and the need to social distance, those forms of transportation have almost been decimated,” Ryan Robertson said.
“You look at traditional transportation ridership and they’re way, way off compared to pre-pandemic,” he said. “With all the variants factoring into our decision-making process, about how to get from Point A to Point B, it’s very difficult to see a point at which public transportation is going to gain a foothold back to the pre-pandemic position.”
Which means people were going out and buying cars.
Of the nearly 80 per cent of people looking to buy a new car, Deloitte found, more than half say they prefer gas/diesel vehicles to EVs, primarily because of affordability, range anxiety and access to charging stations.
But that the future is electric, let there be no doubt. The study shows that in the next three years, 60 per cent of car owners in Italy will go electric compared to 26 per cent in the United States. And the reason is incentives. Said Robertson:
“Some form of incentive is necessary. Look what happened in Ontario – incentives disappeared and see what happened to EV sales. But there’s a very fine line you have to walk to not perpetuate the perception in the consumer’s mind that incentives are going to be available forever because that’s not a tenable situation either.
“We’re not there yet but we’re close. There are some signposts along the way that would give us an indication when and potentially by how much we have to start to pull back on incentives. In the matter of a decade, that’s two auto cycles. There’s not a lot of time.”
I asked him, then, whether the federal government should take over everything? Ottawa says that by 2035, all new cars and light-duty trucks sold in Canada will be electric. At present, the federal government and two provinces (Quebec and B.C.) are the only jurisdictions offering subsidies. Other provinces, like Ontario, are digging in their heels. Rather than negotiate endlessly, perhaps it would just be better If the Liberals made EV subsidies their own.
“It’s a difficult question to answer,” Robertson said. “From a federal perspective, there’s a lot of societal issues deserving of attention. Reduction of greenhouse gas emissions is important, but so is homelessness, child poverty – there’s a list as long as my arm that needs attention.
“There’s a need for a conversation involving a variety of stakeholders that are trying to solve an issue or decide who to blame. We have to come together with a common goal and work toward solving some of the larger issues that are before us.”
Norris McDonald, a past Wheels editor in chief, covers the Canadian automotive and global racing scene for the Star. He is a member of the Canadian Motorsport Hall of Fame. [email protected] or follow him on Twitter @NorrisMcDonald2.
Keyword: Deloitte study shows EVs coming on but gas cars still lead