Question
As the Federal Government continues to make significant strides to their commitment of curbing greenhouse gas emissions, they face a complex challenge in their pursuit
As the Federal Government continues to make significant strides to their commitment of curbing greenhouse gas emissions, they face a complex challenge in their pursuit of having more new vehicle sales in Canada being comprised of electric vehicles (EVs) by the year 2030. Despite commendable progress being made within various provinces and territories, a growing concern has emerged regarding the risk that some regions will fall short of adoption targets, resulting in a failure to meet global commitments on emissions reduction. Based on the precedent of recent success with childcare, the federal government is allowing provinces to take the lead on achieiving EV targets. The department of the Environment and Climate Change has been asked to aid in this regard by assiting one province that can achieve 600,000 EVs on the road by 2030. The Environment and Climate Change Canada (ECCC) has engaged the expertise of KPMG to help tackle this challenge and we are responsible for recommending which province, with federal assistance, can be best positioned to meet this goal. The ECCC has developed projections which suggest that among the thirteen provinces and territories, only five Ontario, British Columbia, Quebec, Alberta, and Nova Scotia can be expected to attain this EV target. The selected province will play a pivotal role in Canadas ability to reduce GHG emissions and achieve its sustainability goals. Implementation of the selected policy will establish a precendent that if successful, could lead to further investment by the government into other provinces and may be leveraged by other nations in their pursuit of GHG reduction strategies. To assist the selected province's endeavors, the Federal Government intends to deploy up to $2.5 billion. The ECCC has devised two potential solutions to increase EV ownership in Canada; EV purchase tax rebates, and investments in charging infrastructure. It is essential that the ECCC strike the right balance between availability and affordability to successfully accomplish Canadas goals. The ECCC has explicitly indicated that in order to ensure that this policys impacts can be evaluated in isolation, only one province must be selected, and only one method may be deployed via an agreement with provincial government. The ECCC is also interested in KPMGs perspective on non-investment initiatives that could assist in driving EV ownership. Overview of Market According to an analysis by Consumer Reports (CR), demand for electric vehicles witnessed a staggering 350% increase from 2020 to 2022, quickly outpacing supply. This trend is expected to continue as more consumers experience the benefits of EVs firsthand, including lower operating costs, quieter operation, and improved acceleration. The transition to electric vehicles also has significant implications for the energy sector, with the International Energy Agency (IEA) estimating that electrification could eliminate the need for 5 million barrels of oil per day by 2030. The global electric vehicle market has experienced remarkable growth, with more than 10 million electric cars sold worldwide in 2022, according to the IEA. This represents a substantial increase from around 4% market share in 2020 to 14% in 2022. Notably, China, Europe, and the United States dominate electric vehicle sales, with China accounting for 60% of global sales in 2022. Europe and the United States have also seen significant growth, with sales increasing by 15% and 55%, respectively, in the same period. To further foster the growth of their domestic EV industries, economies such as the European Union and the United States have implemented policies aimed at supporting local battery manufacturing and strengthening supply chains. These measures aim to enhance competitiveness and reduce dependence on imports for key EV components. Challenges & Barriers to Ownership While the electric vehicle market continues to expand, some challenges remain. Concerns about charging infrastructure availability, battery range, and vehicle pricing persist, impacting consumer enthusiasm. However, the perceived obstacles are gradually diminishing, with improvements in charging networks and decreasing costs as technology advances. Affordability remains a key consideration for prospective EV buyers, as the average selling price for electric cars remains relatively high compared to other vehicle types. However, the introduction of more affordable models and increasing economies of scale are expected to address this concern over time. Supply also continues to be a challenge. As Canada builds out a strategy to produce electric vehicles and EV components, it also needs to build out infrastructure to support EVs once they're on the road. That means a lot more charging stationsat home and in public spacesas well as enough clean power to support them. This will require creative thinking in a country as vast and diverse as Canada. What is required and will work in a major urban area isn't necessarily going to fit the realities of many remote rural communities. While Canada can learn from countries farther down the EV path, Canada has unique challenges to overcome, such as a vastly dispersed population, extreme weather conditions and high real estate costs in major urban markets. With one quarter of Canadians living in rural areas and more than half outside of our six largest cities, in order to meet federal targets, governments will need to work collaboratively and with the private sector to ensure infrastructure is available in even the most remote areas of the country. Given the dispersion of Canadas population, charging infrastructure is more expensive to maintain, and faces longer payback periods than in other countries, resulting in slower adoption and higher costs to end consumers. While the Canadian government and EV producers have a vested interest in increasing EV adoption, cost remains a major barrier to entry for many. While many Canadians have expressed an interest in purchasing EVs, this desire is not enough to overcome the sticker shock of EV prices. Amid post-COVID inflation, interest rate hikes, and economic uncertainty, many Canadians are opting to postopone vehicle purchases or are opting for lower price ICE vehcicles despite their environmental impact. Charging Infrastructure Bridging the EV Charging Infrastructure Gap As the popularity of EVs continues to rise, the need for a robust charging infrastructure becomes paramount. However, Canada is still facing significant challenges in keeping up with rapid EV adoption and to ensure convenient and accessible charging options for EV owners. In recent years, many would-be EV owners have opted for ICE vehicles due to a lack of availability of chargers. This capacity issue means that EV adoption does not always meet forecasted demand. To address concerns regarding charging, a diverse range of chargers has been considered. Types of Chargers Currently, three main types of EV chargers dominate the charging landscape. Level 1 chargers, the slowest option, utilize a standard residential 120-volt AC outlet, akin to those used for charging mobile phones. This type of charger is suitable for EV owners with less frequent usage patterns, but has limitations due to the lengthy charging time, taking approximately 24 hours to charge the average EV. In contrast, most public and private stations feature Level 2 chargers, which offer faster speeds, reducing the time to charge to between six and seven hours. These Level 2 chargers offer a good mix of affordability and convenience for EV ownerswith some stations providing free charging as an incentive to EV users. The fastest charging option, Level 3 chargers, also known as DC fast chargers, offer an essential solution for long-distance travel.
Requirement: To help you focus on your analysis, we recommend you consider the following in solving the problem: Establish a clear approach to structure your analysis Identify key issues and develop an action plan for next steps Support that approach with quantitative and qualitative evidence Note any assumptions made along the process
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started