Thanks to Bill C-30, Canadian businesses can write off 100 percent of the purchase price (up to a maximum of $55,000) for electric vehicles, hybrid-electric, and hydrogen fuel-cell cars and either brand new or even used models. This tax write-off is available for vehicles that will be used before 2024. After 2024, that will be reduced to 75%, and after 2025, it will go down further to 55%.

The 100 percent write-off means that the entire price tag of the vehicle is deducted from your income in the first year, lowering your tax bill. Most assets depreciate over time which gives you only a fraction of the price tag each year. Keep in mind that, as an asset, an electric vehicle must be used for business and producing income.

The consumer EV rebate program, Incentive for Zero-Emission Vehicles (iZEV) has been very popular in Canada so far. In 2019, it was originally funded with $300 million from the Canadian government, which was expected to last 3 years. In December 2021, an announcement was made as part of the government’s Economic and Fiscal update 2021 report that $73 million has been added to the program.

Additionally, the federal and Ontario governments are investing $259 million to help General Motors (GM) build Canada’s first all-electric vehicle assembly plant. With the funding, GM will convert their existing Ingersoll, Ontario facility to build commercial electric vans, which are scheduled to start rolling off the production line in December 2022.

What benefits do electric vehicles have over gas/diesel?

Have you seen those gas prices lately?

The convenience of charging at home (or office) while you are doing other things beats going to the gas pump and staring at the little counter, watching your money disappear. There are also fewer moving parts, oil, and other smelly liquids to deal with regularly.

The Frunk. A trunk is located in the front of the car, where an engine would typically be found. Composition of the words “front” and “trunk.” Who doesn’t like saying frunk? In addition to the fun frunk, if your home has solar panels, you can charge your electric vehicle using their free power! Some can even power your home in a blackout situation. If you’re an electrician, it would say a lot about you and your brand to pull up to a potential job in an electric car. Talk about a conversation piece!

What are the cons?

Electric vehicles aren’t as proven over time as traditional car models, not that that has quelled the popularity. But, there have been ongoing supply chain issues, which cause problems for wannabe EV drivers. In March 2022, Volkswagen Canada stopped taking orders for their ID.4, citing high levels of demand and supply chain issues in an update to their website. Then a week later Kia Canada was forced to stop taking orders for their EV6 and Niro electric vehicles, as well as the plug-in hybrid Sorento. Similar to Volkswagen, demand has been so high due to industry-wide chip shortages which have affected production and availability. 

Meanwhile, Tesla’s market share continues to grow in key markets, including Canada. Even though its growth target is 50 percent, Elon Musk believes it could hit 60 percent despite Tesla’s own supply chain issues:

“We plan to grow our manufacturing capacity as quickly as possible. Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries. The rate of growth will depend on our equipment capacity, operational efficiency and the capacity and stability of the supply chain. Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through the rest of 2022.”

Other than not being as proven and having supply chain issues (as with everything in 2022, it seems), some people have a problem with how quiet electric vehicles are…which is the best first-world problem to have. A too-quiet car. Another issue for long-range drivers is having to stop to recharge occasionally, which may be an issue if you drive a long way to see customers.

What else grinds people’s gears about electric vehicles? The need to install a charging station at home. Although you can recharge using a standard wall socket. All electric vehicle models come standard with a portable cord-set that lets you charge using any standard household outlet. A “Level 1” charging is the slowest but ensures that no matter where you are, you can always recharge. If you purchase a plug-in hybrid, it’s possible that that’s all you really need, as it fully recharges most plug-in hybrids overnight.

The most common way to charge is called “Level 2” and most electric vehicle drivers install a Level 2 charging station at home. All electric cars and charging stations sold in North America use the same plug standard, which means any car can use any Level 2 station across Canada and the United States. Level 2 stations have similar electrical requirements to a clothes dryer or stove and any certified electrician can install them. What to do about work? You can always ask your office’s property management to install a charger at your office/shop/workplace.

For Tesla, their most common charging station is the “Wall Connector”. They suggest taking home the charging station before your new car because although most installations will take a few hours, finding and scheduling an electrician can take up to two weeks. When you’re on the go, charging a Tesla is no problem. With 30,000+ Superchargers, Tesla operates the largest charging network in the world. Located on major routes, the “Superchargers” keep you charged when you’re away from home. Simply plug in, charge for 15 minutes and you’re good for another 322 kms.

Should I buy one used?

Used prices for electric vehicles are sky-high right now, but they won’t be forever. If you are able to pay cash, it’s less than buying a new one. Remember that leased business assets that depreciate are easier on cash flow. Unfortunately, Tesla has ended their lease buyout program, as they want to sell their used cars themselves or use them for parts.

Timing of buying an asset for business use

Just before your year-end is the ideal time to buy an electric vehicle for your business. Keep in mind that corporations could have a different year-end than December (just like personal tax). 

Buy vehicles, just like other assets, just before you actually need it and not when you desperately need it. Just make sure you have the cash or cash flow to support the regular payments
With an impressive range of choices, Canadians have never had more transportation alternatives to gas-guzzling vehicles. And with the way things are going, we expect demand to continue growing. If you’re a creative entrepreneur who’s wondering about buying versus leasing a business asset such as an electric vehicle, make sure you have a great accountant on your side.