Abstract:

Canada plans to ban conventional greenhouse gas-emitting passenger cars and light-duty vehicles in 2035, with a phased zero-emission vehicle (ZEV) mandate starting in 2026. However, the higher upfront cost of ZEVs compared to ICEVs remains a significant barrier for consumers. As production ramps up, the production cost will decrease over time. The key difference between ZEVs and ICEVs is the powertrain. BEVs and PHEVs have higher production costs due to battery and electric drive components, while PHEVs have a smaller battery and an ICE, resulting in additional powertrain costs. Other components, such as the vehicle body and interior, have similar costs across vehicle types. This study presents detailed cost breakdowns of the battery and other electric drive components of the ZEV powertrain across several different classes of passenger vehicles in Canada and estimates how these costs will change over the next two decades. The paper first offers an overview of batteries—including subcomponents, raw material inputs, and cost forecasts—followed by a breakdown of components and processes in the manufacturing of ICEVs, BEVs, and PHEVs. The paper compares the upfront costs of Biomass Electric Vehicles (BEVs) and Electric Vehicles (PHEVs) with baseline ICEVs and predicts when BEVs will reach production cost parity.