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The Chevrolet Volt is expected to cost about $40,000. ((Illustration: Chevrolet))

Electric cars will become part of the Ontario government's fleet and consumers will get up to $10,000 in rebates to buy one of the experimental vehicles, Premier Dalton McGuinty said Wednesday. 

But with a hefty price tag, the new electric-hybrid cars will be a hard sell.

McGuinty was undeterred, saying eventually "the price comes down."

General Motors Co.'s Chevrolet Volt is expected to hit the roads next year, but will cost as much as $40,000.  

"Electric vehicles are the way to go in Ontario," McGuinty said in a statement released Wednesday morning. "This plan helps get more people behind the wheel of a green vehicle to create jobs, reduce smog and equip Ontario for the 21st century."

European car sales rose in June for the first time in over a year thanks to government "cash-for-clunkers" handouts, automakers said Wednesday.

Manufacturers' group ACEA said sales were up 2.4 per cent to 1.46 million units, the first increase after 14 months of falling sales.

State incentives are credited with firing up car sales. Germans get $3,500 US in cash for swapping their cars. This has accelerated sales by 40.5 per cent in June in Europe's biggest market and by 26 per cent for the first half of the year compared to 2008.

Sales also were up last month in two other nations with the programs — in Italy by 12.4 per cent and in France by 7 per cent.

ACEA said the handouts for car buyers had cushioned tumbling sales in Spain, down 15.9 per cent and Britain, down 15.7 per cent.

Both countries have been hit hard by collapsing house prices, which have held shoppers back from big purchases.

Later, the premier told a news conference at a Toronto auto dealership that he wants electric cars to make up five per cent of all cars on the road by 2020.

In an effort to achieve that, McGuinty announced "rebates of between $4,000 and $10,000 for plug-in hybrid and battery electric vehicles purchased after July 1, 2010.

"They tell me that when they roll the first of these off the assembly line, they're going to be expensive, relative to the traditional car powered by the regular internal combustion engine," he said.  "We want to help people buy those first cars."

The province will buy 500 of the new cars for government use.

When asked why the government is handing out taxpayer dollars to subsidize the new line of autos, McGuinty said the idea is to help build a market for the vehicles.

"At some point, the price comes down ... and you can take away the government initiative."

Subsidy 'won't last forever'

McGuinty said the subsidy, which doesn't begin for 12 months, will eventually be dropped. He just couldn't say when. 

"It won't last forever."

Not all electric or hybrid cars will be covered by the announcement.  The rebate is restricted to cars that can travel on highways.

That rules out the Zenn car, which was designed for urban use and has not been approved for Ontario's highways. 

The government has cited safety concerns, even though two other provinces have approved the Zenn car for use on roads with speed limits below 50 km/h. 

Analysts say the province is using the incentive as an attempt to boost its struggling auto sector and position itself at the forefront of the green technology.

The province also announced plans to expand recharging facilities and allow owners of the new cars to use carpool lanes. 

With files from The Canadian Press