Thank you, Madam Chair.

My name is Nate Wallace. I'm the clean transportation program manager at Environmental Defence Canada. I'd like to thank the members of the committee for the opportunity to share our views on the application of tariffs on Chinese electric vehicles.

When discussing this issue, the debate is often premised upon the idea that there is a trade-off between Canadians getting access to affordable electric vehicles, thus speeding up our net-zero transition, and the need to protect jobs and the investments in Canada's fledgling EV auto sector.

We believe Canada can do both. That's why we favour a balanced tariff approach similar to the European Union's. It's in nobody's interest for any one country to dominate the electric vehicle supply chain, especially not one that is a geopolitical adversary of our closest ally, the United States. It is in our own economic, environmental and security interests to build up an EV industry in Canada that delivers good jobs with union wages.

At the same time, it's important to recognize what tariffs are. They are a tax on Canadian consumers that have the explicit intent of raising prices. As noted by the Parliamentary Budget Officer's recent report on Canada's electric vehicle adoption goals, the price of an electric vehicle needs to fall by about 31% by 2030 to achieve the federal government's EV sales targets.

What we are primarily concerned about is how Canada needs to have a strategy to get EV prices down toward an affordable range for consumers. If the federal government plans to deliberately cause EV price inflation with its tariff policy, there needs to be a plan to compensate for these impacts and continue to drive prices down.

There are limited methods of reducing EV prices from a policy perspective. I'll name a few.

Firstly, there is the option of expanding consumer subsidies. However, our own economic modelling on this option indicates that this can create a perverse incentive for automakers. When the government pays for EV price reductions, it reduces the incentive for automakers to cut costs themselves by investing in battery innovation and research and development. Moreover, as EVs begin to dominate the new vehicle market, these incentives can become increasingly fiscally costly.

Secondly, there is the option of employing more direct industrial policy tools and attaching affordability strings to the EV production subsidies that Canada has been giving out. However, this option is limited by the negotiating room the Canadian government has relative to other countries offering similar production subsidies. Canada, unfortunately, does not have a domestic automaker and relies on foreign investment.

Thirdly, there is the option of encouraging more market-based competition. In the European market, the presence of Chinese competition has caused incumbent automakers like Stellantis and Renault to introduce budget EV options. There is currently no indication that these incumbents will bring these budget models to North America.

Tariffs, of course, reduce competition.

It's important to note that we support the idea of establishing a level playing field. Canadian auto workers should not have to compete with the lower wages of Chinese auto workers. China does not have a system of free and fair collective bargaining.

However, establishing a level playing field should be evidence-based. It is important to note that the 100% tariff number is not evidence-based; it is arbitrary. If we want to level the playing field, we should have an approach more similar to the one used by the European Union, which conducted a subsidy investigation. Chinese automakers that complied with that investigation, such as BYD, received only a 17% tariff, not a 100% tariff. Tesla received an 8% tariff.

The intent of a 100% tariff is not to level the playing field. The intent is to deliberately shut out competition for its own sake by completely wiping out the business case for entering the market.

In the presence of an overwhelming tariff wall, the only safeguard in place to keep EV prices on a downward trajectory is the presence of Canada's electric vehicle availability standard. Our own economic modelling, which was recently cited by the Parliamentary Budget Officer, finds that this measure alone will drive EV prices down by approximately 22% by 2035. This underscores the importance of developing a consensus across all political parties to keep this policy in place. We can't lose sight of the fact that getting affordable electric cars into people's hands isn't something that is optional; it is essential to achieving our climate goals.

Thank you. I'm happy to answer your questions.