First, the good news. Quebecers are buying a lot of electric vehicles. More than they ever have, and more than any other province in Canada. Not only do ZEV sales account for 34.6% of all cars sold in the province in the third quarter of 2024 (up from 28.4% in Q2) but La Belle Province accounted for 53.8% of ZEV registrations across the country in the same time-frame. Yes, I am saying that more than 50% of the plug-in hybrid, battery-electric, and fuel-cell vehicles sold in Canada were bought by green-loving Quebecers.
The bad news is those same Québécois also love subsidies. So much so, in fact, that the provincial coffers from which those subsidies are drawn are running out of money. Here’s why that’s a problem.
Follow the subsidies
As Motor Mouth previously reported back in March of this year, the Coalition Avenir (CAQ), Quebec’s ruling party, decided it would soon begin rolling back its electric-vehicle purchase incentive program, called Roulez Vert. Starting on January 1, 2025, those buying qualified BEVs would see their kick-back reduced from $7,000 to $4,000, while eligible PHEVs would likewise see a dramatic drop in the government’s largess, from $5,000 to $2,000. A year later, these numbers would drop again, electric vehicles eligible only for a $2,000 rebate and plug-in hybrids but a grand. By January 1, 2027, the subsidies, the government said, would be all gone, the result of tighter budgets and soaring demand.
The problem is that Les Habitants are famed for their frugality. No sooner had the government announced the end of its program that there was a mad rush on electric cars. Sales, as noted above, skyrocketed, as those with any inclination to buy electric brought their new-car purchases forward. As incentives to purchase go, the absolute certainty that the car you’re thinking of buying in the future will be $3,000 dollars more expensive the second the clock ticks past 12:01 a.m. January 1 is a virtual guarantee that consumers are going to giddy-up their acquisition. Hence, booming EV sales in Quebec.
Quebec’s coffers empty
So many, in fact, rushed to put money down on a zero-emissions vehicle that Roulez Vert might be out of money. As of November, the provincial government has given away $607,922,875 in subsidizing 96,640 ZEVs so far this year. That’s up some 71,941 subsidies more than those handed out in the full 12 months from April 1, 2023; to March 31,2024, as well as a good deal more money than the $448,405,250 in incentives offered in that same time-frame. In other words, Quebecers really did front-end load their EV sales.
The result, if Driving is reading the tea leaves correctly, is that Roulez Vert is running out of cash. In fact, if the current sales surge continues right up to the January 1 deadline, the Quebec government is now saying it will stop offering EV subsidies altogether as of February 1.
Making this funding shortage problematic for consumers and automakers alike is that the program can’t be topped up again until spring, when the province’s new budget is tabled. An even bigger problem for both parties would be if that “when” — as in when the incentive money gets put back into the system — should become an “if.” Quebec genuinely wants to promote the purchase of zero-emissions vehicles, but is finding it increasingly difficult to afford the subsidization maintaining their popularity requires.
Between a rock and a hard place
The consequences of reducing funding are hopefully part of the province’s planning. Reducing or eliminating subsidizes almost always results in fewer EV sales; Germany’s surprise elimination of incentives last year, for instance, dramatically curtailed ZEV sales. There might have been a silver lining to the whole process if the Quebec government had just cancelled Roulez Vert’s subsidization in February without saying whether it was going to top up the fund later or not. Indeed, it may have wasted a politically-expedient opportunity to study the effects of subsidization on EVs.
If, for instance between February and April — again, between cancellation and budget — sales continued apace or dipped but minimally, then the CAQ could have cancelled the whole program and kept the monies it seemingly desperately need. If, on the other hand, ZEV registrations were to tank, it could have restarted the program — albeit, again, at the reduced rates planned for 2025 — claiming it was the plan all along, and that it’d just had to wait for the next budgetary period. I’m no politician, but that sounds like it would have been a win-win to me.
Instead, the government is confirming the subsidies will end on February, but signalling the measure is but temporary, and will start again post-budget. The result — and you don’t need a PhD in macroeconomics to make this prediction — is that absolutely no one is going to buy an electric vehicle for the two-month interim. Automakers will no doubt be beside themselves. They have quotas to meet and, for the two months between February 1 and April 1, electric vehicles are going to be a tough sale indeed.
The bottom line
Regardless of what happens, legacy automakers are in for a rough ride in Quebec. Whether Quebec’s subsidies are disappearing temporarily or completely, the huge rush to ZEVs over the last few months is probably over. That will make it even harder for automakers to hit their ZEV targets. For those with credits in hand — if an automaker falls short of its quota for EVs, it can buy credits from an automaker who has sold more than its quota, or it can pay a $20,000 fine per car to the Quebec government — they may be able to muddle through the downturn.
For those that can’t hit their quota and don’t have the requisite credits to pay the penalty, then there’s but two stark choices: either replace the subsidy themselves (up to $7,000, if the province does indeed stop rebating) so that customers will continue buying their EVs; or reduce the availability of their ICE-powered cars in La Belle Province until total sales get in line with their quota obligations. Reportedly, at least one automaker is considering the former.
We’ve always known that weaning consumers off EV subsidies would be difficult. That they might disappear completely in not even two months is going to make that transition even bumpier. Either way, I suspect Quebec’s run of headline-generating EV sales success is quickly coming to an end.
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