Rising interest rates pushing EVs out of reach for Canadians: KPMG poll

Most Canadians who plan to buy a car in the coming years would like to purchase a green vehicle, but many will likely be forced to settle for gas-powered as rising financing costs push electric and hybrid vehicles out of reach, according to a poll conducted by KPMG Canada.

Rising interest rates have affected Canadians’ ability to make big purchases over the past months and buying a car is no different, said Damiano Peluso, KPMG’s automotive sector partner in Canada.

The report, published Feb. 14, found 58 per cent of those who plan to buy a new vehicle by 2033 say they want a greener vehicle.

However, 81 per cent of those surveyed said rising interest rates have made EVs’ cost prohibitive and no longer in their price range.

“With expectations of a recession and sharply higher financing rates, our poll research shows consumer sentiment has shifted to pragmatism over ‘the machine of a dream’,” Peluso said.

While the barrier to ownership posed by higher rates may diminish in the coming years if interest rates fall, cost is clearly on Canadians’ minds.

“Right now, if you look at some of the leases people are paying and entering into for the same vehicle, in a lot of cases, it’s doubled,” Peluso said, adding that the financing rate on some leases has gone up from two or three per cent to five or six per cent.

KPMG also cited delays in delivery, “charger anxiety,” limited availability, long-wait times and skepticism over battery technology as some of the reasons why Canadians are putting off buying an EV.

Peluso said these factors may also make meeting the federal zero-emission vehicle targets “really tough.”

In late December, Environment Minister Steven Guilbeault unveiled ambitious targets for electric vehicle sales in Canada.

By 2026 the government is mandating that 20 per cent of all vehicle sales be fully electric. By 2030 that figure rises to 60 per cent and by 2035, 100 per cent.

The Canadian Press reported last year that sales of fully-electric and plug-in hybrid vehicles made up just 7.2 per cent of new car registrations in the first half of 2022. For all of 2021, the proportion was 5.2 per cent.

The cost of electric vehicles currently available for purchase in Canada ranges between $39,500 and $189,000, depending on the type of EV, according to Canadian Automobile Association.

“It’s gonna be a battle,” he said, adding that most of those polled do not believe the targets can be met.

KPMG surveyed 2,001 Canadians in an online platform between Dec. 21, 2022, and Jan. 13, 2023. It said the poll represents a nationally representative sample of adults 18+ across Canada and has a margin of error of + or – 2 percentage points with a confidence level of 95 per cent.

— with additional reporting from The Canadian Press

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