Last week, the federal government announced it was going to “pause” its consumer subsidy of electric vehicles. Considering how assiduously the Liberals have been pushing electric-vehicle adoption, this will cause a dramatic change in the electric vehicle market. Such a seismic shift in EV policy poses a lot of what-why-and-how questions, not the least of which are a) what does this pause mean for the automotive industry?; b) why is this happening now?; and c) how much more will consumers now pay for a battery powered vehicle? Perhaps most importantly, will the newly cash-strapped keep buying zero-emission vehicles?
Well, the first thing you should know is that, since the Incentives for Zero-Emissions Vehicles (iZEV) program started in the spring of 2019, it has helped put almost 700,000 new electric vehicles in households, and has increased market share of ZEVs — which includes pure battery-electrics as well as plug-in hybrids — to 13.5% nationally. It has also cost Canadians almost $3 billion, just part of the $50-plus billion the Liberals have committed to building, selling, and charging electric vehicles.
Originally, the five-year-old program — promised to incentivize purchasers of new ZEVs to the tune of $5,000 for full battery-electrics (and $2,500 for plug-in hybrids) — was set to run until March 31, 2025. But, thanks to the popularity of the program and booming electric-vehicle sales, the fund is quickly running out of money. In fact, according to the Toronto Star, there is only enough money left in the program to subsidize 16,000 more ZEVs. At the current rate of sales, that could mean the federal rebate program will run out of money sometime around February 1.
That is, as Motor Mouth discussed last week, right around when Quebec’s provincial incentive program will likewise run out of money, and will desist, at least temporarily, in subsidizing the sales of those very same ZEVs in La Belle Province.
The result? Where just last month, a Quebecer intent on buying a Hyundai Ioniq 5 or Chevy Equinox could have looked forward to governmental kick-backs totalling $12,000 (the aforementioned five grand from the feds, and a further $7,000 from Quebec’s then uber-generous Roulez Verte program) that same purchase, come some time in February, would get them bupkis.
Both programs are victims of their own success. Quebec had originally planned on simply reducing its $7,000 subvention of BEVs to a more modest $4,000 on January 1, 2025. Incentives for PHEVS were also scheduled to be dramatically cut — from $5,000 to $2,000 — on the same date.
As a result, the province has seen a huge surge in BEV sales as consumers rushed to maximize their incentives before the deadline. This strained Quebec’s coffers, and is the reason the province’s fund will run out of money on February 1. And, since every EV receiving a rebate in Quebec was also eligible for the $5,000 bonus from Ottawa, the federal program has been overwhelmed as well.
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How overwhelmed, you ask? Well, according to the government of Canada’s statistics on the Incentives for Zero-Emission Vehicles (iZEV) Program, in the four years following the program’s initiation — between May 2019 and April 2023 — the feds doled out a total of $890 million to first intenders. In the following 12 months — April ’23 to April 2024 — the program picked up steam, subventing EV purchases to the tune of $806 million.
Since then, however, the federal program doled out a whopping $736 million, just between April 2024 and November 2024, largely because of that rush by Quebecers to beat their province’s rebate deadline. Do some quick math, and it’s likely the program will have spent $3 billion well before April 2025, which is seemingly why the feds are pulling the plug early.
The big question, of course, is what happens next. One possibility is that both the Quebec government and the federal Liberals will replenish the coffers come budget time (April 1). So, even if their rebate programs aren’t available in February and March, in normal times, eager EV intenders could still expect a top-up come April.
These, unfortunately, are not normal times. The Prime Minister has, of course, prorogued parliament until March 24, and, as Chrystia Freeland so dramatically pointed out, the federal government needs to save money in anticipation of combatting Trump’s proposed 25% tariffs, so there’s a distinct possibility the federal incentives will be gone forever.
Ditto for rebates in Quebec, where the reigning Coalition Avenir Québec has suddenly become deficit-averse. Indeed, last week, Motor Mouth predicted Quebecers might well face the prospect of no EV subsidies at all — i.e. no federal nor provincial incentives — as soon as March 31.
Where just last month, a Quebecer intent on buying an EV looked forward to governmental kick-backs totalling $12,000, that same purchase, come February, would get them bupkis
In fact, it appears both funds will shut down in as little as two weeks, leaving a small handful of provinces where EVs will remain subsidized, namely British Columbia (which, barring a similar notice, will continue to offer BEV intenders $4,000, and those shopping a PHEV $2,000); Manitoba; as well as each of the Maritime provinces.
What may shake up Canada’s EV market even more is that some time after May 14 — that’s 51 days, the maximum allowed for a federal election, after the no-confidence motion expected on March 24 — a newly elected Conservative party will almost assuredly rescind Canada’s federal EV mandate.
After that, no one knows what is going to happen to Canada’s electric-vehicle market. That’s because no one has ever rescinded an EV mandate while simultaneously eliminating all subsidization of battery-electrics.
Oh, a few countries have dumped their rebates. Most recently, Germany saw its previously rapidly expanding zero-emission-vehicle segment take a 27% nosedive in the 12 months following the sudden elimination of its subsidization program. Electric-vehicle models had accounted for 18.4% of all new vehicles registrations in 2023, but fell to a 13.5% market share in 2024. Similarly, EV sales in New Zealand dropped by almost half after it cancelled its programs last year. And what will be the knock-on effect when the incoming Trump administration ends America’s USD$7,500 federal subsidy and tries to end California’s EV mandate?
For more on this and other questions affecting EVs and the entire auto industry, please join us for Driving into the Future’s latest expert panel on the State of the Auto Industry 2025. You can register free here.
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