Incentives for Zero-Emissions Vehicles in Canada

Thinking about switching to an electric vehicle (EV)? Depending on where you live, you may have access to certain benefits to help you offset the initial cost. Let’s cover the four types of EVs and what benefits you can access when purchasing a zero-emission vehicle (ZEV) in Canada.

Types of electric vehicles

Battery electric vehicle

A battery electric vehicle (BEV) is driven solely by a battery and electric drive train. It doesn’t have an internal combustion engine (ICE), so it can’t run on gas. BEVs recharge while you drive, but you’ll also need to plug them into an outlet or charging station to refuel.

Some examples of BEVs include:

  • BMW i8
  • Tesla Model 3
  • Toyota RAV4

Hybrid electric vehicle

A hybrid electric vehicle (HEV) has both an ICE and an electric motor. As you drive, the car will be powered by electricity until the battery runs out. At that point, the vehicle will switch to gas. Alternatively, most hybrids can use both fuel sources at the same time.

Full hybrids don’t need to be plugged in. Instead, their battery recharges through regenerative braking.

Some popular HEVs are:

  • Ford Escape
  • Nissan Leaf
  • Toyota Prius

Plug-in hybrid electric vehicle

Like HEVs, plug-in hybrids (PHEV) have both an ICE and an electric motor, but their battery pack is much larger. Most PHEVs will go as far as they can on electricity until they need to switch to gas. They can also use both fuel sources simultaneously.

In HEVs, the battery is considered the backup power source. In a PHEV, the battery typically leads and is supported by the gas tank. Like BEVs, PHEVs need to be plugged in to charge sufficiently.

PHEV examples include:

  • Kia Niro
  • Chevrolet Volt
  • Mitsubishi Outlander

Fuel cell electric vehicle

Because of their newer technology, fuel cell electric vehicles (FCEVs) are currently the least popular of the EVs. FCEVs produce electricity using a fuel cell powered by hydrogen. To refuel, you need to fill the tank with hydrogen at a designated fuelling station.

A few of the most well-known FCEVs are:

  • Toyota Mirai
  • Hyundai Nexo
  • Honda Clarity Fuel Cell

Are all electrice vehicles zero-emission ?

Of these four types of EVs, only BEVs and FCEVs are considered fully zero-emission. Since they still have gas tanks, HEVs and PHEVs can produce tailpipe emissions, but they operate as zero-emission vehicles when in all-electric mode.

The type of EV you purchase will affect the financial incentive(s) you’re entitled to.

Point-of-sale discounts

The Government of Canada started the iZEV program in 2019 to encourage more Canadians to switch to zero-emission vehicles. To support the cost of a new vehicle, the government is offering point-of-sale discounts for those purchasing a ZEV.

This program is available to those purchasing a ZEV or leasing one for at least 12 months. Eligible vehicles are listed here.

Your exact discount will vary depending on the vehicle and duration of your lease. For a new or used EV, you may get up to $5,000 off the sales price. For hybrids, the maximum discount is $2,500.

The iZEV program is available to all Canadians once per calendar year. For business owners, discounts can be applied to up to 10 vehicles per year.

Post-sale benefits

In some provinces, you can combine your iZEV discount with post-sale incentives. For example, in British Columbia, the SCRAP-IT program offers consumers up to $6,000 for purchasing a used EV in exchange for recycling a gas-powered car. In Québec, you can receive a rebate of up to $8,000 for purchasing a new fully electric or plug-in hybrid vehicle.

You can find a full list of benefits available in each province here.

Tax write-offs for zero emission vehicles

The Government of Canada also offers a 100% tax write-off to business owners who purchase a ZEV for $55,000 or less. If the capital cost of the ZEV is above this rate, you can still receive a maximum write-off of $55,000.

This write-off is offered on any eligible ZEV purchased between March 19, 2019, and January 1, 2028. Eligible ZEVs include plug-in hybrids, fully electric vehicles, and fully hydrogen vehicles.

Business owners who receive the iZEV discount can’t access the ZEV tax write-off: they must choose one incentive.

You can find out more about the ZEV tax write-off by contacting the Canada Revenue Agency at 1‑800‑959-5525.

Adapting to an EV

EVs can be expensive, but they’re worth considering if you’re in the market for a new ride. Not only are they much better for the environment, but you’ll also save money on fuel and maintenance. To help you manage the transition, look into the incentives available for zero-emission vehicles in your province.

Another factor that sometimes deters people from switching to an EV is the use of charging stations. It’s a learning curve, but if you do a bit of research, charging your battery will become as simple as filling the tank. Check out this article for information on EV charging.

For more car maintenance tips and DIY guides, check out our blog.

1 Reply to “Incentives for Zero-Emissions Vehicles in Canada”

  1. Malcolm Novar says:

    Net zero? It’s a fallacy as the cars and batteries use a heck of a lot of fossil fuels to manufacture and charge the electric cars. Disposal of the batteries is another environmental problem with the waste of exotic metals..

    Fools’ paradise with EVs.

    By the way, “global warming” is not a real threat to us; it is the politicians who are espousing this fallacy to increase taxes and reduce oil production in our country while buying oil from communist and war mongering countries.

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