After a year of stumbling sales, electric vehicles are finally getting a boost – thanks to the return of the $5,000 EV rebate and higher gas prices.
“Things are looking up for EVs – it’s been a while since I said that,” said Baris Akyurek, vice-president of insights and intelligence at AutoTrader. “What we’re going through is probably the perfect storm.”
On Feb. 16, Ottawa relaunched its rebate for new EVs – called the Electric Vehicle Affordability Program (EVAP) – after suddenly pausing the Incentives for Zero-Emissions Vehicles (iZEV) program in January 2025.
There was “an immediate uptick” following the move, said Andrew King, managing partner at DesRosiers Automotive Consultants.
In February, the most recent month with available sales numbers, automakers sold nearly 13,000 new battery-electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) – up 47 per cent from February 2025, even though the rebate was only in effect for the final two weeks of the month, according to Statistics Canada.
That’s more than 10 per cent of total car sales that month – up from 6.9 per cent in February 2025. EV sales fell sharply when Ottawa paused the rebate, but started to rebound by the end of the year.
The February jump likely includes buyers who wanted an EV but were waiting for the rebate to return.
“Everybody knew the rebate was paused and the government was a bit unclear about if and when it was coming back,” said Trevor Melanson, director of insights and communications at Clean Energy Canada.
Added fuel?
Then, beginning in late February, the war between Iran and the United States sent gas prices surging – hitting close to $2 a litre in many parts of Canada by late March. It’s still not clear how long that might last.
“Just the return of that incentive alone would have driven a pretty big uptick in EV sales,” Melanson said.
While sales figures haven’t been released for March, EV sales have continued to climb with help from gas prices – “with a number of models selling more than 1,000 units” that month, King said.
On AutoTrader, searches for new and used EVs jumped 33 per cent from February to March, Akyurek said, adding that for most buyers it comes down to affordability – both the initial purchase price and ownership cost.
“When the federal announcement came through Feb. 16, new battery electric vehicle searches spiked by quite a bit,” he said. “The real uptick in used EVs just came when gas prices started to increase.”
Cheaper to own?
Depending on the vehicle, most BEVs can cost $5,000 to $10,000 more to buy, before the rebate, than a comparable gas-powered vehicle.
But higher gas prices are changing the calculus and are a reminder that, because of lower energy and maintenance costs, EVs cost less to own over time than gas cars, Melanson said.
A typical Canadian driver can save more than $20,000 over 10 years by switching to a BEV, according to a recent Clean Energy Canada report. That’s using last year’s national average gas price of $1.42 per litre. With higher gas prices now, the savings are even more.
When gas is $1.71 per litre, a BEV will save its owner roughly $185 a month on fuel costs alone, Melanson said.
But if gas prices drop and drivers aren’t spending as much to fill up, will EVs still be as appealing?
Akyurek said AutoTrader’s website saw a spike in EV interest in 2022 when Russia invaded Ukraine.
“Gas prices went up from [around] $1.40 per litre to over $2 and when we looked at our data the following Monday, interest was up,” Akyurek said. “And when the gas prices came down, the interest slowed down accordingly.”
Compared to 2022, there are now more affordable EV models available, used prices have dropped and upcoming new federal tailpipe emission standards will likely push automakers to offer some cheaper models, including Chinese-built EVs, he said.
“If gas prices come down, there’s going to be a bit of a normalization on the used EV side,” Akyurek said. “But the demand for new EVs will be there for the foreseeable future.”
Limited-time offer?
While the federal rebate is helping boost sales, it’s set to gradually decrease before expiring in March 2031.
“There’s a financial incentive for you to buy an EV as soon as possible, because the rebate’s bigger the sooner you buy it,” Melanson said.
Several provinces, including British Columbia and New Brunswick, ended their rebates last year – and Quebec’s is set to conclude at the end of this year.
So, can sales keep climbing without rebates? While much can change between now and 2031, Akyurek thinks the federal rebate is still needed, at least for now. “We’re at a point where government pull is needed because the consumer push is not there,” he said.
Before Ottawa paused iZEV, new EV sales had been climbing every year – from about 185,000 in 2023 to a record 264,000 in 2024, partly fuelled by Quebec buyers rushing to get an additional $7,000 provincial rebate before it dropped to $4,000 at the end of that year. But even without rebates, automakers still sold more than 177,000 BEVs and PHEVs in Canada last year, Akyurek said.
While we may not switch to BEVs and PHEVs as quickly as some had predicted, sales will likely keep climbing, Akyurek said.
“The journey forward is now going to take longer than we thought,” King said. “[EVs] need to make sense to Canadian consumers from a number of perspectives – upfront cost, performance, availability, convenience, operating cost.”
And while some buyers still worry about range and charger availability, the biggest barrier for many is price – and Ottawa may need to extend EVAP after 2031, Melanson said.
“We don’t need to convince Canadians to go electric so much as we need to make it easier for them,” he said. “Do that and they’ll convince their neighbours – there’s a strong argument for EVs parked in their driveway.”
On February 16, Ottawa relaunched its rebate for new EVs – now called the Electric Vehicle Affordability Program (EVAP) – after suddenly pausing it in January 2025.
On AutoTrader, searches for new and used EVs jumped 33 per cent from February to March, Akyurek said. For most buyers, it comes down to affordability – both initial purchase price and ownership cost, he added.