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(Bloomberg) — General Motors Co. said governments in Canada are pulling back on subsidies for electric cars at an awkward time — just as they want carmakers to ramp up sales of cleaner vehicles. 

At the moment, some consumers can get as much as C$12,000 ($8,673) off the price of an electric car. Federal rebates deduct as much as C$5,000, while the province of Quebec chips in as much as C$7,000 and British Columbia offers a maximum of C$4,000. 

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But government officials looking at large budget deficits are now reining in the use of taxpayer cash. In March, Quebec said it will phase out subsidies by 2027. In June, British Columbia significantly narrowed the availability of its rebate, citing “available funding” and faster-than-expected EV sales growth. 

Meanwhile, the Canadian government has set an aggressive target for phasing out gasoline-powered vehicles. 

It’s mandating that all new light-duty vehicles sold by 2035 must be electric or plug-in hybrid. There are interim targets of 20% by 2026 and 60% by 2030. Under Canada’s proposed system, automakers get compliance credits for EV sales and infrastructure investments, but incur deficits for falling short. Some provinces have their own targets — BC’s threatens manufacturers with financial penalties for shortfalls.

“Just as mandates and regulations start to bite, the timing is not necessarily lining up very well, in that the purchase incentive support comes off,” GM Canada President Kristian Aquilina said in an interview with Bloomberg News in Vancouver. “It will have to have an impact. So we cannot ignore that.”

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Detroit-based GM and dealerships will be “working very hard to try to overcome that,” Aquilina said, but added other support could also boost adoption, such as better charging infrastructure.

The incentives have made a big difference for buyers. EV market share is several times higher in Quebec and British Columbia than Ontario, which canceled its consumer rebate in 2018.

GM began 2024 with EVs making up about 3% of sales in Canada and closed the third quarter with the proportion at 12.5%, a spokeswoman said, which the company put down to good orders for its Equinox electric SUV.

The carmaking giant currently loses money on its battery-powered models, but CEO Mary Barra said on Tuesday it is working to turn a profit on EVs “as quickly as possible.”

If the Conservative Party of Canada wins the next election — due in about 12 months — it might relax the EV mandates. Leader Pierre Poilievre has criticized the policy, saying that he’s worried it will impose large costs on consumers.

—With assistance from Jay Zhao-Murray and David Welch.

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