It was supposed to be simple: go electric.
About a quarter of Canada’s climate-change causing emissions come from the transportation sector and so shifting to electric vehicles – spurred by sales mandates, consumer incentives and tightening fuel economy regulations – has long been a cornerstone of federal and provincial climate plans.
But, nothing about going electric has been simple.
Governments, car companies and consumers are realizing the road to the low-emissions electric future is bumpier, twistier and generally more chaotic than most of us imagined.
After years of growth, 2025 marks the first year in which EVs lost significant market share in Canada.
That doesn’t mean it’s time to pull a u-turn and give up on going electric, quite the opposite: it’s time for fresh, considered commitment.
The federal government’s new auto strategy, announced earlier this month, is a start: tougher tailpipe emissions standards, tax breaks, duty remissions, $5,000 EV rebates, money for charging infrastructure and more. But, the policy is light on the details, which will make or break it. So, it’s just a start, and will likely need tweaks in the future to achieve the goal of speeding EV uptake and growing the manufacturing sector.
EVs had a bad year in 2025, but it wasn’t entirely their fault. Blame for the downturn can be spread far and wide. The road to the electric future didn’t have to be quite this messy, but then Americans elected Donald Trump, again, and he worked to dismantle supports for EV investment and roll back fuel economy regulations. Car companies haven’t delivered cheap (sub-$30,000) EVs and seem uninterested, at least not when there’s easier money to be made on gas-guzzlers and high-end EVs. The federal government’s deal to allow a small number of Chinese EVs into Canada seems unlikely to fix that affordability problem.
And, in an entirely unforced error, both federal and provincial governments fumbled the ball on EV rebates. Not to mention the fact public fast-charging infrastructure in this country is spotty at best, downright awful at worst, especially if your car can’t use Tesla’s Superchargers. (Just try opening your phone’s map app and searching for nearby 100-kilowatt fast-chargers, or even 50-kilowatt. It’s disheartening.) And, on top of all that, the affordability crunch is making the higher upfront cost of EVs less appealing to mainstream consumers.
J.D. Power’s Canadian figures show that, among franchised auto dealers (a category that notably excludes Tesla) the market share of EVs dropped to 5 per cent in 2025 from 6.8 per cent in 2024. Similarly, plug-in hybrid market share fell to 3 per cent from 3.9. Only sales of regular hybrids saw an uptick, jumping to 14 per cent from 10.5.
“I think we can say at this point that EV adoption in North America is going to take much longer than the government first envisioned,” wrote Robert Karwel, director of data and analytics at J.D. Power in Canada, in an email.
Bear in mind these EV market share numbers would not look so bad if direct-to-consumer EV brands Tesla, Rivian and Lucid were included. (Statistics Canada vehicle registration data will soon reveal the full 2025 sales picture.) But even Tesla, typically the market leader, also had a terrible year.
“Tesla sales over all plummeted more than 60 per cent due to the Canadian counter tariffs on U.S.-built vehicles (and other reasons),” Andrew King, the managing partner of DesRosiers Automotive Consultants wrote in an email.
Those “other reasons” surely include consumer backlash against Tesla boss Elon Musk for going on a rampage through the U.S. government with his DOGE gang. That episode made some people very angry and prompted bumper stickers such as, “I bought this before Elon went crazy” and “Shut up Elon.”
“While [Tesla in Canada was] able to source the Model Y from Germany in [the fourth quarter], they didn’t have an alternate low-tariff source for the Model 3 – which had a huge impact in the luxury car segment where EV sales fell more than 70 per cent,” King said.
Last year’s decline in the EV market wasn’t shared evenly across brands and categories. In the U.S., The New York Times reported sales of electric luxury vehicles had stalled, but the situation here is different.
Looking just at franchised luxury EV market share (again, notably excluding Tesla), luxury vehicles fared better than their mainstream counterparts. Luxury brands saw a smaller decline in EV market share, dropping to 8 per cent in 2025 from 8.7 per cent in 2024. Luxury plug-in hybrids, meanwhile, saw rapid growth to 8 per cent from 5.8 per cent of the market.
Within the luxury EV market, fortunes differed. Cadillac, for example, added new electric models to its lineup and saw its EV sales surge 98 per cent in 2025 compared to the previous year. But, over the same period, Porsche saw sales of its electric Taycan sedan sink nearly 31 per cent.
Karwel said the fact franchised luxury brands generally fared better with EVs last year than mainstream brands was largely because of the end of federal and provincial consumer rebates. It exclusively hit buyers at the lower end of the market.
“This had the twin effect of making those [mainstream] models more expensive once again in consumers’ minds, and pulling people forward in a rush purchase of an EV in [the third and fourth quarter of] 2024 (which we did see), followed by a slump despite [manufacturers] efforts to offer factory incentives to compensate,” wrote Karwel. Since the federal government had indicated EV rebates would return – ahead of the official announcement earlier this month – some consumers were likely waiting to make their purchase, he added.
Because of the sheer number of factors involved – tariffs, subsidies, inflation, new models hitting the market and old models being discontinued – drawing any conclusions about the future of Canada’s EV market based on the chaos and tumult of 2025 is risky.
As Andrew King wrote, there wasn’t some “overriding market dynamic” at play here. “In certain segments, sales of EVs are highly concentrated in one or two models,” he said. “Thus, in compact car, Nissan winding down sales of the (old) Leaf had a huge impact and led to a massive decline in EV sales in that segment. Conversely, in subcompact car, the introduction of the Fiat 500E led to a huge increase in BEV sales in that segment of approximately 90 per cent.”
In other words, the EV market is messy and still young. Last year was the first major speed bump on the long road to the electric future. The only certainty is that it won’t be the last.
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