Vehicle Efficiency Initiative

Last updated

The Vehicle Efficiency Incentive (VEI) was introduced in the 2007 Canadian federal government budget, aimed at promoting fuel-efficient vehicles. The VEI took effect on March 20, 2007, and it included a performance-based rebate program offering up to $2,000 for the purchase of a new fuel-efficient vehicle, a neutral treatment of a broad range of vehicles with average fuel efficiency that were widely purchased by Canadians, and a new Green Levy on fuel-inefficient vehicles.

Contents

The rebate program, eventually called ecoAUTO Rebate Program, initially offered $1,000 for new automobiles with a combined fuel consumption rating of 6.5 L/100 km (43.5 mpg) or better and minivans, sport utility vehicles (SUVs) & other light trucks with fuel consumption of 8.3 L/100 km (34 mpg) or better, calculated based on a combined 55 per cent city and 45 per cent highway rating. An additional $500 was offered for each half litre per 100 km improvement in the combined fuel-efficiency rating of the vehicle below these thresholds, for a maximum total of $2,000. The ecoAUTO rebate program applied to 2006, 2007 and 2008 model-year vehicles purchased or leased (12 months or more) between March 20, 2007 and December 31, 2008. All applications must have been received by March 31, 2009.

A Green Levy was charged for new passenger vehicles (excluding trucks) with fuel-efficiency ratings of 13.0 L/100 km (21.7 mpg) or worse. The incentive structure will include a new Green Levy on these types of vehicles, payable by the manufacturer or importer when the vehicles are delivered into the Canadian market. The fuel-efficiency rating is calculated based on the same criteria as the rebate program above. The Green Levy will start at $1,000 for passenger vehicles with combined fuel-efficiency ratings of at between 13.0 L/100 km and 14.0 L/100 km (20.2 mpg), and increase in $1,000 increments for each full litre per 100 km increase in the combined fuel-efficiency rating above the 13.0 L/100 km floor, to a maximum of $4,000, for vehicles with ratings of 16.0 L/100 km (17.7 mpg) or worse.

In addition to the incentives and levies, the Canadian Federal Budget of 2007 provided $6 million over the next two years for a seven-fold increase in annual federal support delivered through Environment Canada for scrappage programs, and it provided for $30 million over the next two years for incentives to be designed by Environment Canada and Transport Canada in consultation with stakeholders that will remove older, high-emitting vehicles from Canadian roads.

Criticisms

According to auto industry analyst Dennis DesRosiers, large SUV buyers reacted to the VEI by buying pickups, which are exempted from the extra tax. [1]

A study by the conservative C.D. Howe Institute questioned the effectiveness of the program. Specifically, their study claimed that the program did not affect the majority of vehicles, that the Canadian government failed to adequately consult the industry and did not phase in the policy, which hurt the market share of the Big Three North American automakers, and that the program was ineffective in reducing greenhouse gases. [2]

Financial costs

For the ecoAUTO program, the Canadian Federal government allocated $160 million over 2 fiscal years beginning in 2007. [3] The government spent $116 million in 2007-2008, [4] and allocated $102.7 million for fiscal year 2008-2009. [5]

Notes

  1. The Star.com
  2. "Federal auto 'feebate' program is flawed, study says". Archived from the original on 2007-11-23. Retrieved 2007-11-23.
  3. The 2007 Budget: Incentives for car drivers
  4. Supplementary Estimates (A), 2007-2008 For the Fiscal year ending March 31, 2008, page 11
  5. 2008-09 Estimates Parts I and II The Government Expense Plan and The Main Estimates, page 1-20

Related Research Articles

<span class="mw-page-title-main">Fuel efficiency</span> Form of thermal efficiency

Fuel efficiency is a form of thermal efficiency, meaning the ratio of effort to result of a process that converts chemical potential energy contained in a carrier (fuel) into kinetic energy or work. Overall fuel efficiency may vary per device, which in turn may vary per application, and this spectrum of variance is often illustrated as a continuous energy profile. Non-transportation applications, such as industry, benefit from increased fuel efficiency, especially fossil fuel power plants or industries dealing with combustion, such as ammonia production during the Haber process.

<span class="mw-page-title-main">Toyota Prius</span> Hybrid electric automobile

The Toyota Prius is a car built by Toyota which has a hybrid drivetrain, combining an internal combustion engine with an electric motor. Initially offered as a four-door sedan, it has been produced only as a five-door liftback since 2003.

The Corporate Average Fuel Economy (CAFE) standards are regulations in the United States, first enacted by the United States Congress in 1975, after the 1973–74 Arab Oil Embargo, to improve the average fuel economy of cars and light trucks produced for sale in the United States.

<span class="mw-page-title-main">Honda Insight</span> Motor vehicle

The Honda Insight is a hybrid electric vehicle that is manufactured and marketed by Honda. Its first generation was a two-door, two passenger liftback (1999–2006) and in its second generation was a four-door, five passenger liftback (2009–2014). In its third generation, it became a four-door sedan (2019–present). It was Honda's first model with Integrated Motor Assist system and the most fuel efficient gasoline-powered car available in the U.S. without plug-in capability — for the length of its production run.

<span class="mw-page-title-main">Toyota RAV4 EV</span> Motor vehicle

The Toyota RAV4 EV is an all-electric version of the popular RAV4 SUV produced by Toyota until 2014. Two generations of the EV model were sold in California, and to fleets elsewhere in the US, with a gap of almost ten years between them.

<span class="mw-page-title-main">Chevrolet Equinox</span> Motor vehicle

The Chevrolet Equinox is a series of mid-size, compact crossover SUVs from Chevrolet, introduced in 2004 for the 2005 model year. It replaces the North American Chevrolet Tracker and Chevrolet S-10 Blazer. The third-generation Equinox also replaced the first-generation Chevrolet Captiva.

<span class="mw-page-title-main">Ford Fusion Hybrid</span> Motor vehicle

The Ford Fusion Hybrid is a gasoline-electric hybrid powered version of the mid-sized Ford Fusion sedan manufactured and marketed by Ford, now in its second generation. A plug-in hybrid version, the Ford Fusion Energi, was released in the U.S. in February 2013.

<span class="mw-page-title-main">Ford C-Max</span> Motor vehicle

The Ford C-Max is a car produced by the Ford Motor Company from 2003 to 2019. It has a five-door compact multi-purpose vehicle (MPV) design. The Ford Grand C-Max has a longer wheelbase.

The Energy Tax Act is a law passed by the U.S. Congress as part of the National Energy Act. The objective of this law was to shift from oil and gas supply toward energy conservation; thus, to promote fuel efficiency and renewable energy through taxes and tax credits.

Honda Clarity Motor vehicle

The Honda Clarity is a nameplate used by Honda on alternative fuel vehicles. It was initially used only on hydrogen fuel-cell electric vehicles such as the 2008 Honda FCX Clarity, but in 2017 the nameplate was expanded to include the battery-electric Honda Clarity Electric and the plug-in hybrid electric Honda Clarity Plug-in Hybrid, in addition to the next generation Honda Clarity Fuel Cell. Clarity production ended in August 2021 with US leases for the fuel cell variant continuing through to 2022.

<span class="mw-page-title-main">Fuel economy in automobiles</span> Distance travelled by a vehicle compared to volume of fuel consumed

The fuel economy of an automobile relates distance traveled by a vehicle and the amount of fuel consumed. Consumption can be expressed in terms of volume of fuel to travel a distance, or the distance traveled per unit volume of fuel consumed. Since fuel consumption of vehicles is a significant factor in air pollution, and since importation of motor fuel can be a large part of a nation's foreign trade, many countries impose requirements for fuel economy. Different methods are used to approximate the actual performance of the vehicle. The energy in fuel is required to overcome various losses encountered while propelling the vehicle, and in providing power to vehicle systems such as ignition or air conditioning. Various strategies can be employed to reduce losses at each of the conversions between the chemical energy in the fuel and the kinetic energy of the vehicle. Driver behavior can affect fuel economy; maneuvers such as sudden acceleration and heavy braking waste energy.

<span class="mw-page-title-main">Hybrid electric vehicle</span> Type of hybrid vehicle and electric vehicle

A hybrid electric vehicle (HEV) is a type of hybrid vehicle that combines a conventional internal combustion engine (ICE) system with an electric propulsion system. The presence of the electric powertrain is intended to achieve either better fuel economy than a conventional vehicle or better performance. There is a variety of HEV types and the degree to which each function as an electric vehicle (EV) also varies. The most common form of HEV is the hybrid electric car, although hybrid electric trucks, buses, boats and aircraft also exist.

<span class="mw-page-title-main">Chevrolet Volt</span> Range extended electric automobile

The Chevrolet Volt is a plug-in hybrid manufactured by General Motors, also marketed in rebadged variants as the Holden Volt in Australia and New Zealand and the Buick Velite 5 in China, and with a different fascia as the Vauxhall Ampera in the United Kingdom and as the Opel Ampera in the remainder of Europe. Volt production ended in February 2019.

The EcoAuto Rebate Program was a Canadian government program administered by Transport Canada to provide incentive to people to buy fuel-efficient vehicles, to protect the environment, through rebates. The program applied to vehicles purchased between March 20, 2007, and December 31, 2008. The EcoAuto Program affected eligible cars from 2006 to 2008.

A scrappage program is a government budget programme to promote the replacement of old vehicles with modern vehicles. Scrappage programmes generally have the dual aim of stimulating the automobile industry and removing inefficient, more polluting vehicles from the road. Many European countries have introduced large-scale scrappage programmes as an economic stimulus to increase market demand in the industrial sector during the global recession that began in 2008.

<span class="mw-page-title-main">Car Allowance Rebate System</span> US federal incentives program for consumer fuel efficiency boosts

The Car Allowance Rebate System (CARS), colloquially known as "cash for clunkers", was a $3 billion U.S. federal scrappage program intended to provide economic incentives to U.S. residents to purchase a new, more fuel-efficient vehicle when trading in a less fuel-efficient vehicle. The program was promoted as a post-recession stimulus program to boost auto sales while putting more fuel-efficient vehicles on the roadways.

<span class="mw-page-title-main">Toyota Prius Plug-in Hybrid</span> Motor vehicle

The Toyota Prius Plug-in Hybrid is a plug-in hybrid liftback manufactured by Toyota. The first-generation model was produced from 2012 to 2016. The second-generation model has been produced since 2016.

<span class="mw-page-title-main">Government incentives for plug-in electric vehicles</span>

Government incentives for plug-in electric vehicles have been established around the world to support policy-driven adoption of plug-in electric vehicles. These incentives mainly take the form of purchase rebates, tax exemptions and tax credits, and additional perks that range from access to bus lanes to waivers on fees. The amount of the financial incentives may depend on vehicle battery size or all-electric range. Often hybrid electric vehicles are included. Some countries extend the benefits to fuel cell vehicles, and electric vehicle conversions.

<span class="mw-page-title-main">Hyundai Ioniq</span> Compact car

The Hyundai Ioniq is a compact five-door liftback manufactured and marketed by Hyundai. The nameplate Ioniq is a portmanteau of ion and unique. It is marketed as the first automobile to be offered without a standard internal combustion engine, but rather sold in hybrid, plug-in hybrid, and all-electric variants.

<span class="mw-page-title-main">Toyota Prius (XW50)</span> 5-door liftback car manufactured by Toyota

The fourth-generation Toyota Prius was first shown during September 2015 in Las Vegas, and was released for retail customers in Japan on 9 December 2015. The launch in North American market occurred in January 2016, and February in Europe. Toyota expected to sell 12,000 fourth generation Prius cars a month in Japan, and to reach annual sales between 300,000 and 350,000 units.