Automotive News Canada - January 2024 - 27

* JANUARY 2024
27
ZEV mandate: The rules and how the feds will keep score
CONTINUED FROM PAGE 1
to more plug-in hybrid vehicles
in the mandate's early years than
did the initial draft of the legislation
in December 2022.
These tweaks show that the
federal government is monitoring
the marketplace and willing
to respond accordingly, said
Stephen Beatty, vice-president
and corporate secretary of Toyota
Canada.
" I'm prepared to sit on the optimistic
side of the scale and say -
as the government has acknowledged
that the market wasn't
moving as fast as they expected
it to in terms of the technologies
that were coming to the forefront
- that they'll continue to be open
to understanding the fact that the
market and the regulations need
to march in lockstep, " he said.
BETTER, BUT NOT GOOD
That's not to say Toyota, or
Canada's auto industry more
broadly, endorse the new set of
rules.
From the outset, Toyota
Canada argued against the implementation
of a ZEV mandate,
saying the government should
instead concentrate on regulating
vehicle greenhouse-gas emissions.
The Canadian Vehicle
Manufacturers' Association
(CVMA), which represents the
Detroit Three in Canada, as well
as the Global Automakers of
Canada (GAC), which represents
overseas brands, have been
similarly critical of the federal
approach.
The final mandate is an
improvement from the draft rules
introduced at the end of 2022, but
a marginal one, said GAC CEO
David Adams.
" The changes that were introduced
in the final regulation add
a little more pragmatism to the
regulation, in one sense, " Adams
said. But the compliance " pathways "
remain limited despite the
year of talks with industry and
other stakeholders, he said.
For instance, the new early-action
credits allow automakers
to bank credits for ZEVs sold
in 2024 and 2025, but those can
only be earned if an automaker
exceeds an eight-per-cent ZEV
sales threshold in 2024 and a
13-per-cent threshold in 2025. The
early-action credits must also
be used by the 2027 model year,
before the more stringent ZEV
targets come into force later this
decade.
FEDERAL ZEV SALES
TIMELINE UNCHANGED
The federal Electric Vehicle Availability
Standard sets annual sales targets
for zero-emission vehicles as a percentage
of total light-duty vehicles
sold. The targets are unchanged from
the draft legislation released Dec. 21,
2022. Quebec and British Columbia
have their own mandates - which are
tougher than the federal mandates -
but B.C. so far has announced just
three increments.
Model
year
Federal
mandates
2025 -
B.C.
mandates
Quebec
mandates
- 22%
2026 20% 26% 32.5%
2027 23% - 45%
2028 34% - 60%
2029 43% - 75%
2030 60% 90% 85%
2031 74% - 91%
2032 83% - 95%
2033 94% - 97.5%
2034 97% - 99%
2035 100% 100% 100%
Sources: Governments of Canada, Ontario
and British Columbia
AUTOMOTIVE NEWS CANADA
workaround for the auto companies
in model years 2026 and 2027.
Automakers are able to earn
credits by investing in high-speed
EV charging infrastructure.
Every $20,000 spent on chargers
with power ratings of at least
150 kilowatts translates into one
compliance credit. However, the
stations must open by the end
of 2027 and are ineligible if they
receive funding from other government
programs.
In addition, the charging
spending can offset no more than
10 per cent of an automaker's
overall compliance requirement.
Despite including the carveout,
the federal government
doesn't expect many automakers
to take this route. In cost analysis
assumptions accompanying the
new regulations published in the
Canada Gazette, the government
predicts that spending $20,000 per
credit on infrastructure
will be more costly for
automakers than building
more ZEVs.
CREDITS FOR PHEVS
2026 35-49
Model
year
All-electric
range (kms)
50-64
65+ or 50+
with 7 seats
80+
2028 <50
50-79 (all)
80+
2029 <80
80+
Source: Government of Canada
AUTOMOTIVE NEWS CANADA
The regulations require that
ZEVs make up 20 per cent of automaker
sales by 2026, 60 per cent
by 2030 and 100 per cent by 2035.
The targets are unchanged from
the 2022 draft, as are most of the
other core components of the legislation.
Automakers
earn one credit
for each ZEV sold and can bank
credits to use in subsequent years
for up to five years. Companies
that fail to meet the ZEV sales
threshold in any given year will
face penalties of $20,000 per nonqualifying
vehicle sold and will
have three years to discharge the
deficit.
The rules have no direct bearing
on dealers or the used-vehicle
market.
The legislation does offer one
1
1
Credits
0.15
0.75
1
2027 50-79 (<7 seats) 0.75
50-79 (7 seats)
0.75
1
1
" Vehicle manufacturers
and importers will not
typically choose to invest
in ZEV infrastructure but
instead would generally
meet 100 per cent of their
annual compliance obligation
through the manufacture
or importation
of additional ZEVs, " the
government said in the
federal publication.
NEW PHEV CREDITS
The treatment of
PHEVs has also evolved
since the initial version
of the mandate, albeit
minimally.
Under the draft ZEV sales mandate, the Toyota RAV4 Prime, with
its 68 kilometres of all-electric range, wouldn't have qualified for a
full credit. Under the new rules, it does. PHOTO: TOYOTA
in 2029 and beyond.
A further caveat stipulates that
PHEVs can also make up only 45
per cent of an automaker's ZEV
sales obligation for model year
2026, 30 per cent for 2027 and 20
per cent for all subsequent years.
The updated scale
offers automakers and
consumers greater leniency
than the draft regulations,
said Meena
Bibra, a senior policy
adviser for clean transportation
at the think
tank Clean Energy
Canada.
Bibra: The
adjusted
mandate
gives
automakers
" flexibility " in
their offerings
of batteryelectric
and
plug-in hybrid
vehicles.
FILE PHOTO
Battery-electric vehicles earn
a full credit throughout the life of
the legislation, but only PHEVs
with an all-electric range of more
than 80 kilometres earn comparable
credits through 2035 and
beyond. While this is unchanged
from the draft rules introduced in
2022, the final regulations grant
full or partial credit to a greater
swath of PHEVs in the early
years of the mandate.
In 2026, PHEVs with an electric
range of between 35 and 49 kilometres
earn 0.15 of a credit, those
with range of 50 to 64 kilometres
earn 0.75 and those with at least
65 kilometres of range earn a full
credit. The threshold jumps to
an electric range of more than 50
kilometres for full or partial credit
in 2027 and 2028, before climbing
to 80 kilometres for full credit
" It's giving certain
automakers a little bit
of additional flexibility
when it comes to the
sales that they make
and the offerings of battery-electrics
and plug-in
hybrids that they have,
in particular OEMs like
Toyota. "
Bibra pointed to the
current RAV4 Prime,
which has an all-electric range of
about 68 kilometres, as an example
of a vehicle that will qualify
for full credit through 2027 but
wouldn't have under the draft
rules.
THE PHEV COMPROMISE
During the consultation period,
Clean Energy Canada advocated
for PHEVs with ranges of
more than 80 kilometres to get
full credit, though Bibra said
that beyond 2030, it is a " big
flexibility " to consider PHEVs
equivalent to BEVs.
" Most Canadians do drive
less than 100 kilometres on
their daily commutes, " she said.
" Most of the trip would be covered
on electric range, so that's
kind of the compromise to be
able to give Canadians those
options. "
Several other EV advocacy
and environmental groups
pushed during consultations for
PHEVs to receive only partial
credit or be stripped of ZEV status
entirely because they contain
emissions-producing internal-combustion
engines in addition
to electric powertrains.
While Ottawa stopped short
of this stricter interpretation
of ZEVs, Brian Kingston, CEO
of the CVMA, said he wouldn't
classify the limited number of
adjustments between the draft
and final regulations as a win for
the industry.
" None of that changes the fact
that this regulation is completely
unnecessary to begin with, "
he said.
As with Toyota's Beatty,
Kingston said the ZEV rules -
and the sales
targets in particular
- will
need constant
monitoring and
reevaluating
in the coming
years.
Kingston:
Sales targets
will need
constant
monitoring
and
assessment
over the
years.
FILE PHOTO
" You can't
set highly prescriptive
annual
targets without
ensuring
that we have all
the preconditions
in place, "
Kingston said,
pointing to current
charging
infrastructure
as one glaring
oversight that he said makes the
sales targets unachievable without
further government action.
" The dialogue will continue, "
he said, " and we're going to continue
to call on the government
to improve these regulations
and determine whether or not
they're feasible. " -ANC
Martinrea CEO: Di Tosto could take over 'in the future'
New president will
take some operational
responsibilities from
CEO Pat D'Eramo
By DAVID KENNEDY
T ORONTO BUREAU CHIEF
CANADIAN PARTS SUPPLIER
Martinrea International Inc. has
appointed CFO Fred Di Tosto as president,
broadening the longtime executive's
role as the company develops its
" bench. "
The promotion will give Di Tosto
greater executive leadership responsibilities
across Martinrea's operating
groups, the company said Jan. 8. He
will also retain his role overseeing the
company's finances.
Di Tosto has been a core part of
Martinrea's decision-making team for
years, and the appointment " reflects
the continued growth of our leadership
group, " said CEO Pat D'Eramo.
D'Eramo was previously both CEO
and president of the parts supplier
that operates 59 plants and offices and
employs about 19,000 people globally.
He will continue to serve as CEO,
as well as a member of the company's
board, but will begin offloading some
operational responsibilities to Di
Tosto over the coming months.
Martinrea's various business
units will report to Di Tosto, who will
report to D'Eramo.
" It'll take about a year to flesh it
out, but I see him taking over the
operation in the future for sure, "
D'Eramo told Automotive News
Canada.
Di Tosto, 48, joined Martinrea as
vice-president of finance in 2010 and
has been CFO since 2011. He has also
held numerous other roles within the
company over the past decade, such as
executive vice-president of corporate
strategy and head of the flexible manufacturing
group.
D'Eramo said the transition of operational
responsibilities will allow him
to focus more energy on the broad
range of strategic and innovative initiatives
Martinrea has under way as
the auto industry embraces electrification.
Rob
Wildeboer, the company's executive
chairman, said the move is part
of a wider company effort to " develop
its bench " and build an enduring
leadership team capable of managing
the significant growth Martinrea has
seen over the past several years.
" As we grow, there's more to do
and more opportunities. " - ANC
Di Tosto
has been a
core part of
Martinrea's
decisionmaking
team
for years.
SUPPLIED
PHOTO
Automotive News Canada - January 2024

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