The federal government is developing a strategy to get more zero-emission vehicles on Canada's roads, a process that has sparked a battle between the environmental lobby and the auto industry as each seeks to shape policy.

Navdeep Bains, Minister of Innovation, Science and Economic Development, and Marc Garneau, Minister of Transport, are scheduled to announce on Friday the creation of an advisory group that will recommend policy on zero-emission vehicles or ZEVs.

The advisory group and five subcommittees will contain members from environmental groups and auto industry organizations as well as companies in the auto sector with a goal of having a policy established by next year.

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But the auto industry and environmental groups are already at odds about whether federal policy should require that a certain percentage of annual new vehicle sales consist of ZEVs. Such a requirement is strongly opposed by the auto sector.

One environmental activist who is participating in the federal discussions said he wants to see regulations that push these vehicles into the market faster. Forecasting consumer demand and providing incentives for drivers are not sufficient to get enough ZEVs on the road, he said.

Some environmental groups are urging governments to adopt aggressive regulations that would require half the vehicles sold in 2025 to be zero emission, a goal the auto industry rejects as wildly optimistic.

The electricity sector, including local distribution companies, also has a big stake in the development of a policy and is eager to see a heightened effort to get more electric vehicles on the road.

Canadians bought just 4,000 electric or plug-in electric vehicles in 2015, 0.2 per cent of total new vehicle sales.

Quebec legislation requires that ZEVs represent 15.5 per cent of sales by 2025, with a target of having 100,000 such vehicles on the road by 2020.

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In a report issued last year, Toronto-based Pollution Probe and Plug'n Drive – a coalition of electricity-sector groups – laid out a list of recommendations aimed at spurring sales of electric vehicles. They included measures to support the expansion of charging stations; incentives for EV car buyers and for dealers; and public information campaigns aimed at educating consumers about advances in electric-vehicle technology.

Pollution Probe's work on this issue "underscores that it will require proactive support and effort from many facets of the marketplace, in order to make this shift as seamless as possible to the consumer," the organization's executive director Ingrid Thompson said Thursday. "This means that regulated mandates can work only if they are one piece of a larger puzzle" that would include governments, auto makers, the electricity sector and a range of other stakeholders.

The subcommittees set up to help develop a federal government policy will look at: vehicle supply; the state of the infrastructure for ZEVs; costs and benefits of owning the vehicles; education and public awareness; and the impact of the technology on clean jobs and environmentally friendly economic growth.

A briefing document for members of the committee examining costs and benefits of ownership says the objective is to make the purchase prices of ZEVs competitive with those of vehicles powered by internal combustion engines.

The cost of a zero-emission vehicle, estimated to be 25 per cent higher than internal combustion engine vehicles, is a significant barrier to higher sales of ZEVs, the document says.

Costs are coming down, but Fiat Chrysler Automobiles NV president Sergio Marchionne said in a speech in Toronto earlier this month that the auto maker loses $20,000 (U.S.) on every electric Fiat 500 it sells.

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Governments should pursue a broad range of strategies to reduce carbon dioxide emissions from the transportation sector, instead of concentrating on the battery electric vehicle market, which represents less than 1 per cent of sales, said Stephen Beatty, vice-president of Toyota Canada Inc.

Toyota is not opposed to ZEVs – in fact, its fuel cell-powered Mirai is a ZEV – but Mr. Beatty said hybrids, where Toyota has focused much of its investment on reducing emissions, offer a 30-per-cent reduction in greenhouse gas emissions on all sizes of vehicles.

"With low gas prices, Canadians are buying SUVs," he said. "Current ZEV technology does not provide a favourable price [to] performance ratio in large, heavy vehicles."

Governments also need to consider the current fleet on the road, he added, pointing to incentives to get older vehicles off the road as one example.

One auto industry source who said he would not speak publicly until after the announcement said a national policy is needed, but mandating that ZEVs make up a certain percentage of sales is the wrong approach. Auto makers that sell in Canada don't control the supply of such vehicles and can't control consumer tastes, he said.