EV Sales Take a Big Hit Following Incentive Freeze

Sales of zero-emission vehicles (ZEV) fell precipitously in Canada’s most important markets following the announcement that the Incentive for Zero Emission Vehicles (iZEV) program had run out of money.

In Ontario, which led the nation in ZEV sales last month, sales were down 14 per cent, according to data from DesRosiers Automotive Consultants. In Quebec, where both the federal and the provincial incentive dried up in quick succession, sales were down 20.9 per cent. Similarly, sales were down 3.1 per cent in British Columbia.

Oddly, ZEV sales were up in the prairies, climbing between 15 and 22 per cent across Manitoba, Saskatchewan, and Alberta. Unfortunately, sales in those provinces weren’t high enough to offset the losses in Quebec, Ontario, and B.C. Nationwide, ZEV sales were down 8.2 per cent in February, though they’ve only fallen by 2.9 per cent so far this year.

The numbers are noteworthy as they represent the first full month of sales since consumers could no longer access the iZEV subsidy. The federal government announced in January that demand for the subsidy was so strong that all of the funding had been exhausted ahead of schedule. The program offers a tax incentive of up to $5,000 for electric vehicles (EVs), plug-in hybrids (PHEVs), and hydrogen vehicles, among others, but Ottawa has not announced if or when the program will be renewed.

The pause in the iZEV program was only one of the confounding factors affecting ZEV sales. In addition, consumers are facing a cost of living crisis that has been pushing them to more and more affordable vehicles since at least 2024, AutoTrader data suggests.

Making matter worse, Canada is in the midst of a trade war launched by the United States, which is throwing the wider economy into turmoil. The automotive sector has started feeling the effect of levies against steel, even as vehicles were temprarily spared from tariffs. With the risk of trade action against the industry more specifically, automotive experts warn that parts plants could close down within a matter of weeks and that prices for new vehicles could increase by an average of as much as $6,000 due to the tariffs.

Indeed, sales across the automotive industry were down in February. Scotiabank reports that light vehicle sales were down 1.7 per cent in February 2025. Although falling ZEV sales contributed to that decline, they do not account for all of it.