EV rebates are disappearing in Canada. What does that mean for the market?
Based on global trends, experts suggest the market and vehicle manufacturers will adjust
When Shanna Bernier was looking for a car that could fit her growing family, she knew she needed something bigger than her Nissan Sentra. But she also wanted something that was more fuel efficient.
So she started looking at electric vehicle (EV) hybrids.
"The government incentive was motivating. It made me think like, OK, this is something that our family can afford," Bernier, who is based in Sherbrooke, Que., told the Cost of Living.
Between the federal and provincial rebates, she was able to save $10,000 on her new $65,000 Toyota Rav4 hybrid. It turns out, she was one of the last to get such a deal.
In January, the federal government announced that the Incentives for Zero-Emission Vehicles program would end ahead of its scheduled March end date, due to high demand. The program offered customers up to $5,000 towards an EV purchase.
Some provinces and territories continue to offer EV rebates of their own. In Quebec, buyers were able to get up to $7,000 off a new electric vehicle, but suspended it in December. Other provinces offer rebates ranging from $2,500 to $5,000, depending on a handful of requirements, such as fund availability.
In British Columbia, it's unclear how much money is left in its rebate fund. Manitoba's rebate program is set to end in March 2026, or when its funds run out.
According to Statistics Canada, new EV sales have grown steadily year over year.
Some experts say the loss of these rebates could lead to a dip in the EV market in Canada. But Riz Akhtar doesn't believes it necessarily means EV sales would drop off entirely.
"Government incentives do make a difference in markets where there isn't much competition," said Akhtar, an EV market growth analyst based in Melbourne, Australia.
"Things might not grow at the same pace, but at the same time they will eventually stabilize and the market will do its own thing."
When rebates end
Akhtar says there's no question that rebates can lead to more people buying electric vehicles, especially federal ones.
"They generally have the best impact across the entire sort of ecosystem. And it sends consumers a very clear message," he said.
Akhtar said New Zealand's rebate program, which launched in 2016, pushed EV sales up to 20 per cent of vehicle sales. But when a new government took charge in 2023, the rebate program was given an end date — and the scramble began.
"Everyone had a mad rush to try and get their electric car by December of 2023. And then sales fell off the cliff," said Akhtar.
Eventually, the market recovered. Some manufacturers cut their prices — Polestar, for example, slashed prices of new EVs by up to 25 to 30 per cent. Dealers did the same. But according to Akhtar, EV sales made up just seven per cent of vehicle sales for 2024.
Australia's federal government hasn't established cash incentives for EVs, instead leaving it up to their state governments. Akhtar says the result was a mixed bag.
He says in 2023, EV purchases made up seven per cent of the market, and that 2024 wasn't much different.
One thing that makes a big difference, Akhtar says, is access to Chinese-made EVs.
In Australia and New Zealand, those cars are widely available, and are significantly cheaper than their North American counterparts.
The situation is different in Canada, where Chinese EVs have been subject to a 100-per-cent tarriff since last October. Plus, North American drivers typically want bigger cars, so it's not a one-to-one comparison.
What's next in Canada
Leon Cheliadin, general manager of the Applewood Nissan dealership in Richmond, B.C., says car companies in Canada will adapt.
He says car manufacturers factor in rebates when they set the prices for their electric vehicles, and will likely lower EV prices to encourage people to keep buying them.
Both Nissan and General Motors have offered discounts on their electric vehicles for now.
"We always complain that the cars need to be more affordable. We need better interest rates, better programs, more rebates, because we're the ones presenting it to the client. And we know from the clients that a lot of cars are just not affordable in today's world," said Cheliadin.
But Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers Association, says manufacturers need time before they can bring the prices of the vehicles down.
Currently, a federal mandate requires at least 20 per cent of new vehicle sales by automakers by 2026 to be zero-emissions vehicles, with that set to increase to 100 per cent by 2035.
"That number is impossible to achieve if you are not incentivizing consumers in the transition. If the government were to remove that mandate and be more realistic about the timeline, you could adjust the supports accordingly," said Kingston.
Without the federal incentive, as well as the rebates in other provinces, Kingston says he expects to see a drop in EV sales during the first quarter of 2025.
"No one expects these incentives to have to remain in place forever, and we have never made that case," said Kingston.
"But the point is, in the early days of this transition, you need incentives to help achieve mass market adoption. And we are still very much in the early days."
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Produced by Jennifer Keene
