The federal government says it will pause a five-year-old rebate program that has handed out up to $5,000 to Canadians looking to buy an electric vehicle.
Launched in 2019, the Incentives for Zero-Emission Vehicles (iZEV) Program has backed the purchase of more than 546,000 vehicles. By 2023, 11.7 per cent of vehicles in Canada were electric or hybrid, up from 3.1 per cent at the start of the program.
In a statement, Minister of Transport and Internal Trade Anita Anand said she was “delighted” to see the success of the rebate program. Others were les optimistic.
Clean Energy Canada’s director of public affairs Joanna Kyriazis said the program has helped Canadians see “huge cost savings” when buying EVs. Its termination, she said, represents a “big oversight” for Canadians trying to save money and a growing EV industry.
“We’ve been calling for the program to get recapitalized,” said Kyriazis of the EV rebate fund. “It’s just been burning through cash.”
The EV rebate program was scheduled to pause either on March 31, 2025, or until funding ran out. As of Jan. 10, there was $71.8 million left in the fund, according to a Transport Canada tracker.
The program makes vehicles eligible for an incentive of between $2,500 to $5,000. That would mean somewhere between 14,000 and 28,000 more vehicles could receive the rebate before funding dries up. Kyriazis said that won't take long given the current rate of EV sales and Canadians' desire to save money over the long run.
“We’re looking at a month or less,” she said. “There’s going to be a huge rush.”
Owning an EV could save you thousands of dollars a year
Federal and provincial rebate programs were initially created to help close the differences in upfront costs between a gas car and a comparable electric vehicle. It's a gap that is steadily closing. Once purchased, an EV can save an owner up to $4,000 a year, according to recent data from Clean Energy Canada.
Selling a gas-powered Honda CR-V and buying an electric Volkswagen ID.4, for example, would save $3,000 a year over the life of the car, the report found.
“Electric vehicles save so much money once you do get your hand on one. It costs $5 to $10 to charge at home,” Kyriazis said. “Cars would have to pay 40 cents per litre to compare to that.”
Minister Anand’s statement said the federal government will continue a parallel program that offers rebates to Canadian businesses and organizations buying or leasing zero-emission trucks through March 31, 2026.
The decision to pause the light-duty EV rebate program comes as the Liberal government has been thrown into uncertainty after Prime Minister Justin Trudeau announced he would resign once the party found a new leader.
Werner Antweiler, an energy economist at the University of British Columbia’s Sauder School of Business, said whether the EV rebate fund is renewed will depend on whatever budget is brought in by the next federal government.
On one side, the Liberal government’s statement appears to leave the door open for the rebate program to get re-capitalized, said Kyriazis.
On the other, Antweiler said the Conservative Party of Canada hasn’t said much about its climate policy other than it wants to get rid of the consumer carbon tax.
Rebate pause comes as green investments put on hold
Between 2020 and the summer of 2024, automotive and battery manufacturers announced $34 billion in investments in Canada’s electric vehicle and battery supply chain, according to Natural Resources Canada.
But in recent months, economic uncertainty has led several companies to back out of the deals. In July 2024, Umicore Rechargeable Battery Materials Inc. announced it would delay construction of a $2.7-billion battery project in Kingston, Ont., due to a worsening EV market.
And last month, a $1-billion lithium-ion battery plant slated for expansion in Maple Ridge, B.C., was put on hold after the Taiwanese parent company said it wanted to focus on domestic production.
Conservative Party of Canada Leader Pierre Poilievre has repeatedly promised to “axe” the carbon tax should he win a looming election. Threats from U.S. president-elect Donald Trump to impose crippling tariffs on Canadian exports have only deepened uncertainty in green investments.
“Regulatory uncertainly is a big concern for businesses,” said Antweiler. “The uncertainty about carbon pricing is certainly putting a dent in this.”
Despite the apparent cooling of green investments in North America, Kyriazis says there are still several regulations in place that will drive Canadian car-makers to stay in the electric market.
In 2026, an EV availability standard will require carmakers to increasingly offer more EVs to customers as part of federal targets that require all new light-duty vehicles to be 100 per cent zero emission by 2035.
“If the U.S. and Canada allow investments to be squandered, that just means China is going to win the global auto race,” said Kyriazis. “Right now, China is eating our lunch.”
Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers' Association, said the announcement to pause the rebate program will “significantly” reduce electric vehicle sales in Canada and make the federal government’s mandated electric vehicle sales targets “increasingly unrealistic.”
“This comes at the same time as a slowdown in the build out of public charging infrastructure that is weighing on the pace of the transition to electric,” said Kingston in an email.
Kingston said the federal government needs to undertake an “urgent review” of Canada’s Electric Vehicle Availability Standard and evaluate if it's still feasible.
Rebates tightening across jurisdictions
A year ago, combined provincial and federal rebates meant eligible British Columbians could have received up to a $9,000 discount a new electric vehicle. O
Once the federal rebate is paused, eligible B.C. residents will only be able to qualify for a maximum provincial rebate of $4,000. That maximum goes down for those earning more than $80,000 a year.
The variety of electric cars are available under the rebate program has also declined over the last year.
In June 2024, the B.C. government made a unilateral decision to abruptly cut about 75 per cent of electric and hybrid models from its rebate program.
Those restrictions mean the maximum cost of qualifying vehicles in the “cars” category — including plug-in hybrids, battery electric and fuel cell-powered cars — has dropped to $50,000 from the previous $55,000 under the CleanBC Go Electric rebate.
Josie Osbourne, who was B.C.’s energy minister at the time, said the change was made to ensure rebates were targeted at middle-income families, and would push manufacturers to lower their prices. She said EV sales were “increasing faster than anticipated” requiring government to adjust the rebate program due to “available funding.”
“That is always the Achilles heel of any program,” Antweiler of the latest pause on federal rebates. “If it’s successful, it becomes expensive.”
