Canada’s electric vehicle (EV) adoption is losing momentum as affordability challenges, shrinking subsidies, and limited charging infrastructure weigh on demand, economists say.
Electric vehicles accounted for 13.7 per cent of total vehicle sales in 2024, but that share dropped earlier this year to an average of 8.1 per cent, according to Statistics Canada data.
“The incentives have come off, there’s the fact that we’re fighting a trade war, and people are more worried now about their jobs and their financial situation than they are obviously about the environment,” Pedro Antunes, chief economist of the Conference Board of Canada told BNN Bloomberg.
The percentage of people who said they would exclusively buy an EV dropped to 29 per cent this year, from 40 per cent last year, according to an AutoTrader survey earlier this year.
The pullback follows new U.S. tariffs, weakening consumer confidence, backlash against Tesla, and the suspension of major rebate programs in Ottawa, British Columbia, and Quebec, according to Statistics Canada.
Incentives dry up
Government incentives that supported early adoption have ended, and that’s now driving the slowdown in sales, Charles Bernard, chief economist for the Canadian Automobile Dealers Association, told BNN Bloomberg.
The federal government offered a $5,000 rebate through its iZEV program, which started off in 2019. It abruptly ended in March after the allocated funding ran out.
British Columbia and Quebec also ended their incentive programs citing economic instability and high costs.
“This was eventually going to happen, but when announced, consumers flocked to dealerships rapidly, dealers were moving tons of EVs and thus the overall numbers were inflated,” said Bernard.
He said customers are facing a lot of uncertainty about pricing. The average EV costs around $63,000 in Canada compared to about $48,000 for new gas-powered vehicles, according to AutoTrader data.
“Some of them are being rightfully misguided by governments not offering clarity on if incentives will come back. That has resulted in a slower EV market compared to 2024,” said Bernard.
Transport Canada said “no new decisions or announcements have been made regarding a potential reopening of the iZEV Program” in an email to BNN Bloomberg.
Bernard said EV resale values remain weaker for internal-combustion vehicles, though most current EV owners don’t regret their purchase and many are likely repeat buyers.
Zero emission vehicles (ZEVs) made up about one in seven new cars sold in 2024, accounting for 60 per cent of Canada’s total growth in vehicle registrations. In some provinces, they represented as many as one in three sales, according to a 2025 report by Statistics Canada.
Sales of zero-emission vehicles fell 23 per cent in the first quarter of 2025, bringing their market share down to around nine per cent.
Bernard said hybrids and light trucks appear to be selling faster.
He said while price remains the top barrier to EV adoption, charging access is the second major problem.
Not enough chargers
Ottawa has pledged to fund 84,500 public chargers and 45 hydrogen stations by 2029 through its Zero Emission Vehicle Infrastructure Program (ZEVIP).
Right now, the government’s electric charging locator shows 14,722 available public chargers.
“We’re a long ways from having a grid that facilitates travel in our big expanse of a country,” Antunes said.
“Families that have two cars will make a choice of having a second car that’s electric, but still relying on a gas powered vehicle to be able to get around here.”
Automakers feeling the slowdown too
Hyundai Canada says buyers are still interested in EV options, but many are shifting toward hybrids.
“So far this year, EV sales across the industry are down nearly 40 per cent compared to last year, and Hyundai Canada has seen a similar trend as the EV market adjusts,” Jessica Todd, director of sales at Hyundai Auto Canada Corp told BNN Bloomberg.
On a positive note, she said Hyundai and its luxury brand Genesis sold 45,700 electrified vehicles in 2024, up 35 per cent from the year before.
The company is part of a new joint venture called IONNA, alongside BMW, GM, Honda, Kia, Mercedes-Benz, Stellantis, and Toyota, which plans to build 30,000 high-speed charging stations across North America, said Todd.
Better use of tax dollars?
Antunes questions whether tax dollars could have been better spent.
He said Canada should have taxed carbon instead of heavily subsidizing production.
“Tax what’s bad, and let the market guide the solutions, rather than forcing people to,” said Antunes.
Antunes said the recent change in the federal government has added uncertainty and there needs to be some clarity around the emissions reduction plan.
“Prime Minister Carney has already delayed the targets that we had for EV sales in this country for 2026. We need a plan that is credible, costed, and tells the truth around what the costs of this transition are.”
He said Canadians still rely heavily on gas-powered vehicles, and the national fleet is turning over slowly. Statistics Canada data shows more than 93 per cent of registered vehicles in Canada run on gasoline.
Global comparison
Antunes said Canada’s EV share has fallen to about eight per cent this year, while the European Union’s share climbed to nearly 20 per cent in 2024 and is still growing.
Most of the world’s EV growth is happening in China, where more than 11 million vehicles were sold last year, which makes up about two-thirds of global sales.
Antunes said Canada’s trade position and 100 per cent tariffs on Chinese EVs have made it harder to access more affordable options.
“If you are trying to move the needle and get people to purchase more electric vehicles, you have to give them the offering of something that’s more affordable,” said Antunes.
“If we want to put tariffs on China for political reasons, that’s one thing but if we want to build our own electric vehicle manufacturing, that’s going to be a challenge.”
