Experts expect sales to continue rising, as consumers take advantage of Ottawa’s EV Affordability Program.Corey Rudy/Reuters
Federal electric-vehicle incentives and surging gasoline prices are boosting sales of EVs again, after purchases slowed last year.
More than 12,600 zero-emission vehicles were sold in February, compared with nearly 8,700 the month before, according to recent Statistics Canada data. Sales peaked at more than 30,000 in September, 2024.
Experts expect sales to continue rising, as consumers take advantage of Ottawa’s EV Affordability Program, and seek relief from inflated gas prices, owing to the continuing conflict in the Middle East.
The program, which allocates $2.3-billion in total over a period of six years, offers $5,000 off a new EV this year, with lower rebates to follow. It’s all part of the government’s initiative to have EVs make up 75 per cent of national vehicle sales by 2035.
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Recent underperformance in the EV sector has been driven in part by costly price tags and a one-year gap between the end of the federal EV rebate in January, 2025, and this year’s EV purchase and leasing incentives, which went into effect in February.
The market essentially “collapsed” in 2025, Bank of Montreal senior economist Erik Johnson said in an interview. In 2024, monthly EV sales were consistently above 20,000, reaching a peak in September, 2024, according to Statscan. By February, 2025, sales had fallen to about 8,600.
EVs cost about $10,000 more than comparable gas-run vehicles and that’s the biggest barrier pushing sales down, Mr. Johnson said.
“In general, new vehicles have just become a challenging budget item for most Canadian households,” he added, noting that monthly financing payments have increased by hundreds of dollars in recent years owing to higher interest rates on auto loans, rising vehicle prices and fewer affordable models on offer.
The $5,000 rebate will bring down the cost of buying or leasing battery-electric and fuel-cell EVs. That program will “stabilize and recover the market,” which floundered after Ottawa’s initial EV rebate ran out in early 2025, Mr. Johnson said.
In a note to clients on April 17, Mr. Johnson noted that EV sales in the last 13 days of February after the incentive announcement drove up monthly sales to 47 per cent higher than the same month last year. The surge was particularly felt in Quebec – which also offers a provincial EV incentive and has the lowest electricity prices in the country – where sales shot up 153 per cent compared with February, 2025.
Also driving consumer interest in EVs are high crude oil prices, which reached multiyear highs this week owing to the war in Iran and the effective closure of the Strait of Hormuz.
While February’s increase in EV sales was recorded largely before the oil shock, sales will likely jump again in March and April as consumers look to avoid gas-powered vehicles, according to Gal Raz, an associate professor of sustainability at Western University’s Ivey Business School.
“Part of it is psychology,” he said. “People just see, ‘Oh my God, the prices are going up, we should probably move to an EV.’”
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An AutoTrader survey of about 17,000 Canadians from Feb. 9 to March 11 found half of respondents would consider buying an EV. That’s the first increase after four years of declining consumer interest, according to Baris Akyurek, AutoTrader’s vice-president of insights and intelligence.
Data from the online vehicle marketplace also show a jump in searches for EVs, inquiries sent to dealerships and vehicles sold since February, he said.
“The federal incentive program has a big impact” on interest in new EVs, he said. “Now, with the increasing gas prices, used EVs are also seeing a big uptick.”
The recovery in interest is expected to continue. If gas prices stay high into December, BMO’s Mr. Johnson said there could be another push to buy EVs before the federal subsidy drops to $4,000 in January.
After that, the incentive will decrease again to $3,000 in 2028 and 2029. Another drop will take the incentive down to a $2,000 subsidy for consumers buying in 2030 and 2031, after which the program is set to end.
Even if the war in Iran ends, shipping through the Strait of Hormuz is restored and gas prices cool, federal EV incentives could continue to attract buyers.
Mr. Akyurek said he thinks there will be interest in EVs as long as the incentives are there.
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But translating that interest into sales requires more than just a reduced price tag. For consumers to “cross the chasm” to EV ownership, practical needs have to be addressed, he said.
Along with cost concerns, buyers worry EVs won’t be able to take them as far as a gas-powered vehicle, particularly in rural areas. A lack of extensive EV infrastructure, such as charging stations, can also deter consumers.
If the government can deliver on its $1.5-billion promise, made in February, to expand Canada’s charging network, consumers will likely be more encouraged to buy, Mr. Akyurek said.
The government’s goal is to have EVs make up 90 per cent of sales by 2040.
While Canada was on track to have EVs make up 20 per cent of new car sales by this year, the number plummeted to 9 per cent in 2025 after the rebate was cancelled, Prof. Raz said. If the country wants to meet its goals, the government will have to keep the EV incentive going, he said.
“It’s going to be tough, unless the rebate stays.”