How government incentives support your transition to fleet electrification

May 6, 2022 Finance

The far-reaching benefits of fleet electrification are evident. Alongside the positive effects that zero-emission vehicles (ZEVs) represent for our planet and our health, an increasing number of studies point to their potential in reducing costs and boosting driver retention.

Nevertheless, the costs of adding zero-emission vehicles and chargers to fleets, as well as possible ZEV sales mandates in the future, can seem daunting. Fortunately, there are several government incentives available in Canada that are designed to help transporters make the switch, as well as advisors to help fleets navigate these programs.

Why does the government offer incentives? Canada’s emissions reduction goals are clear, so governments are providing incentives to help address higher upfront technology costs, increase technology deployment and related jobs and skills development, and collect data to inform future programs and regulations. The advantage for fleets? You get help today paying for what you will need to do on your own in the future.

Government ZEV mandates and climate goals, in a nutshell

In Canada, the government’s 2030 Emissions Reduction Plan outlines a sales mandate requiring 100 percent of new light-duty vehicle sales to be zero-emission by 2035. It also aims to see ZEVs make up 35 percent of total medium- and heavy-duty vehicle (MHDV) sales by 2030 and 100 percent of MHDV sales by 2040 for certain vehicle types.

Although the government has not yet said that it will “mandate” MHDV sales, such policies could come soon considering the 2040 goal posts are now set. This is not just about getting ZEVs on the road; it’s also about realizing the opportunities for Canada to be a global leader right across the vehicle electrification value chain, from mineral mining/processing/refining/recycling to vehicle manufacturing/maintenance and the development of the electrical grid and infrastructure.

Given these developments, the answer to Should we electrify our trucking fleets? is becoming increasingly clear: If there’s a vehicle available that does the job (i.e., return to base, or less than 250 km travelled per day), then yes—let’s get started. With the availability of new diesel trucks being more delayed than ever before, fleet managers are increasingly opting to run current internal combustion engine assets longer and to deploy battery electric vehicles (BEVs).

By beginning this process today, companies can ensure they’re prepared to respond to customer ZE transportation requests, as well as avoid potential penalties and additional costs associated with ZEV mandates in the future. Fleets can also avail of grant, incentive, and tax break programs for purchasing zero-emission vehicles and related equipment from various levels of government, which are available in the short term and detailed below.

Federal incentive programs for zero-emission trucks and buses

The Government of Canada offers a number of incentives to encourage fleet electrification, such as the following:

Programs in this area continue to evolve, and some new incentives may emerge while others end. For instance, the Clean Fuel Standard is set to come into effect in December 2022. This standard will see fuel suppliers regulated to produce cleaner fuels and/or buy offsets, further increasing the cost of fossil fuels. On the flip side, fleets whose vehicles run on electricity instead of fossil fuels can register carbon credits, which they can then sell as a revenue opportunity. Companies like 7Gen help clients apply for these credits to reduce the costs of ZEV infrastructure and vehicle investments.

Incentives for zero-emission medium- and heavy-duty vehicles received a further boost from the 2022 federal budget, which set aside the following:

  • $545.7 million over four years to launch a new purchase incentive program for medium- and heavy-duty vehicles
  • $119.6 million over five years to expand the Green Freight Program to support assessments and retrofits of internal combustion engine (ICE) vehicles used for hauling freight
  • $33.8 million over five years to assist provinces and territories with developing regulations and conducting safety testing for long-haul zero-emission trucks

It is expected that these announcements will result in the introduction of an MHDV point-of-sale incentive later this year, which can be stacked on top of provincial incentives for up to 10 vehicles per year, significantly offsetting costs associated with fleet electrification.

Note that these programs are tied to time-sensitive targets, meaning these opportunities won’t be around forever. For this reason, it’s especially important to work with a trusted partner like 7Gen to access these programs quickly.

Additional provincial support for purchasing zero-emission trucks and buses

Depending on the location of your company in Canada, you may also combine support from the federal government with provincial incentives. At the moment, there are MHDV incentives only in British Columbia and Quebec.

In British Columbia, the Speciality Use Vehicle Incentive (SUVI) Program offers a maximum rebate of $100,000 or 33 percent of the purchase price of an on-road zero-emission MHDV, whichever is lower.

Meanwhile, Quebec’s Transportez vert program offers comprehensive assistance with technology acquisition and training costs, including:

Quebec’s Écocamionnage subsidy program has recently been renewed with significant subsidies for the acquisition of medium- and heavy-duty electric vehicles, depending mainly on battery size, with a budget of up to $175,000 for larger class 8 EV trucks. The Quebec government is also offering an additional subsidy of up to 15% if the EV is assembled and deployed in Quebec.

Fleet operators can also benefit from Quebec Ecoleader subsidies to get support for consulting, fleet electrification, and roadmap design from companies like 7Gen. This support can reach up to $60,000 or 75% of eligible costs.

Other provincial and territorial governments have yet to announce incentives for fleet electrification, but some may be on the way.

Navigating government subsidies and incentives for your fleet

The good news is that there are government incentives available today to ensure your fleet has the zero-emission vehicles it needs for tomorrow.

The catch? The funding is there for you, but only if you fully understand the process and are ready to navigate the challenges on the road ahead.

Before applying to any government program, fleet operators should ensure they have read the fine print (e.g., whether the funding is a repayable loan or a straightforward grant) and know the criteria for applying and for future reporting back to the government.

They should also dedicate time to writing a comprehensive application that clearly outlines the following details of their business plan:

  • How many vehicles they wish to add to their fleet, along with when and where they want to add them
  • The exact vehicle model(s) and equipment they wish to add
  • The co-benefits of their company receiving support from the government (environmental benefits, economic benefits, etc.)
  • Any other financing the company can secure to support making the switch

Meanwhile, finding creative financing solutions, training drivers and maintenance staff, and taking other measures to meet operational challenges is advisable.

A recent action plan from the Pembina Institute can help companies become more familiar with the journey towards fleet electrification.

Nevertheless, working with a dependable partner with proven experience steering successful applications for zero-emission trucks can be a game-changer.

Choose a partner who helps make fleet electrification seamless

Navigating this journey can be tough and daunting, but you don’t have to make your way alone.

A team like 7Gen can help identify your vehicle and charging needs, assess the feasibility and speed of conversion, and broker partnerships and business models to make electrifying your fleet a seamless reality.

“Quite simply, our proposition is that we mobilize the know-how and the money to help fleets electrify today,” says Shayna Rector Bleeker, VP of Strategic Partnerships at 7Gen.

“We will help them in vehicle selection. We will help them in project design. We know many of the original equipment manufacturers (OEMs) and chargers, so we can accelerate technology selection and work through any interoperability issues and service needs to support successful deployment,” she adds. “Additionally, we are familiar with government programs and collaborate on writing applications alongside and on behalf of our clients.”

When you’re working with the right partner, accessing government incentives for fleet electrification can be incredibly rewarding. Not only will you benefit from the numerous environmental, economic, and health benefits of zero-emission vehicles, but your business will also have a direct route to significant savings.

To find out how you can confidently add EVs to your fleet, contact a member of the 7Gen team today.