TORONTO - Ontario is hoping that rebates of up to $10,000 will push people into buying electric cars, in a move that was quickly criticized as yet another investment in General Motors -- and one that may actually hamper the development of next-generation technology.
"Once again we have the politicians playing politics with our industry rather than doing the right thing and letting the market determine winners and losers," industry analyst Dennis DesRosiers said.
"By bribing consumers to buy electric the government is indirectly diverting resources from potentially more promising technologies."
DesRosiers also took issue with the government's argument that Ontario may get more assembly jobs if enough consumers in Ontario buy the product. General Motors said Wednesday its Chevy Volt will initially be built in Detroit, not Ontario.
"The U.S. government has invested about $25 billion in advance battery development and one of the strings attached is for this technology to be built in the U.S.," he said in a note to clients.
Stephen Beatty, Toyota Canada's managing director, said he would have preferred to wait for the results of market tests to determine the viability of plug-in hybrids rather than to push the technology on consumers with an incentive.
"The crucible in which any new engineering achievement is tested is the marketplace and consumers actually have to find this thing to be practical in terms of their every day life," said Beatty, whose company plans to mass produce plug-in hybrid vehicles by 2012.
"My very grave concern about anybody stepping in to try to subsidize products into the market before they're ready is that because so much of the future of the industry is going to rely on advanced technologies, if we get it wrong at launch, we really stand to poison the well for new technologies."
He also wondered about the staging of the announcement, which took place at a Chevrolet dealership in front of a General Motors prototype of the hybrid-electric Volt.
"It is odd, given all of the possible venues for a press conference to hold it at a GM dealership when so much of the future brand strategy of General Motors is based on the Chevy Volt," said Beatty, who wasn't told about the plan ahead of time and found out about it through media reports.
"Frankly, there are a lot of stakeholders in the industry and it would have been very constructive to have everybody gathered for the announcement."
The plan will give buyers of plug-in hybrids and battery electric cars rebates between $4,000 and $10,000 for vehicles purchased after July 1, 2010.
The government wants one out of every 20 cars driven in Ontario to be electric by 2020.
Incentives include perks like special licence plates that allow drivers to use car pool lanes with as few as one person in the car, access to public charging facilities and parking at Ontario government and GO Transit stations.
"We've just sent up a big, bright red flare to the auto production industry saying: In Ontario, they are really committed and determined to make this a reality," Premier Dalton McGuinty said.
"We want Ontario to be a centre of production for the electric car (and) ... to make it easier for people to buy clean cars."
Full details about how it will be rolled out or how much it will cost taxpayers overall remain elusive. Critics say the government has already done enough to help General Motors, with billions of dollars spent on bailing out the company.
DesRosiers estimates that with about seven million vehicles on the road in Ontario by 2020, McGuinty's goal means 350,000 of them would have to be plug ins.
At $10,000 each, he says, that comes to a subsidy of $3.5 billion.
Bill Pochiluk, president of industry adviser AutomotiveCompass LLC, supports the program because he says that without some kind of subsidy, it will be hard for many of the companies to get ahead.
But he worries that with good fuel-efficiency in regular cars and low gasoline prices, the case for spending more on electric cars will be a tough sell.
"Traditional vehicles are getting significantly better, so the gap between traditional internal combustion engine vehicles and these new, more elegant technologies is closing faster than people want to accept," he said.
McGuinty, however, didn't seem concerned.
"Ontarians want to do the right thing by the environment (and they) want to do the right thing when it comes to our economy," he said.
"If they can do something that helps us generate more jobs here, they're prepared to get behind that as well."
McGuinty acknowledged the government didn't yet know how much the overall program would cost, noting the province had yet to decide how long it will last and how many vehicles it will apply to.
The rebate doesn't apply to Toronto's Zenn Motor, which builds electric vehicles for use in low-speed areas. It is excluded from Ontario's rebate program because its cars have not been deemed safe for highway use.
