Navigating the EV landscape: a Canadian perspective

Co-authored by: 

Jason Clifton, Partner, Consulting, EY Canada 
Sara Ganowski, Senior Manager, eMobility lead, EY Canada

A rebate pause and continued tariff and economic uncertainty appear to have dampened consumers’ attitudes towards electric vehicles in 2025, but a rebound may be imminent.

In Brief

• Despite having surpassed one million EVs and plug-in hybrids on Canadian roads, a 2025 consumer report showed a short-term shift in consumer preference.
• 30% of buyers found themselves reconsidering EV purchases, citing upfront costs and the loss of government rebates as key issues. 
• But new incentives and a continued investment in EV infrastructure may serve to reignite interest and boost EV growth for the coming year.

As 2025 drew to a close, Canada’s electric vehicle revolution hit a major landmark, surpassing one million electric vehicles (EV) and plug-in hybrids on the country’s roads¹. The achievement reflected more than a decade of sustained education and awareness, during which electric mobility moved from a niche consideration to a mainstream option for Canadian drivers. 

Against this backdrop, EY’s 2025 Mobility Consumer Index (MCI) provided timely insights into Canadian consumer sentiment towards electric mobility - capturing attitudes and purchase intentions rather than market adoption or sales outcomes. Just as EVs gained traction, an evolving market showed softening sentiment, with internal combustion engine (ICE) vehicles jumping into the lead as Canadians’ favoured choice. 

Evolving intentions 

According to the study, 46% of consumers indicated they intend to buy a car in the next two years, with a preference for internal combustion engines rising by 14% to 58%. During the same period, electric, plug-in and hybrid models dipped from 50% to 36%, suggesting sentiment was being influenced by a variety of factors.

Cost appeared a key consideration. Nearly one third (32%) of respondents cited vehicle pricing as a key barrier, noting entry-level pricing remained in the $40,000 range for EVs. Inflationary concerns, trade dynamics and pressures affecting foreign-manufactured models appear to have factored into perceived affordability, adding to the federal government’s decision to pause its zero-emission vehicle incentive (iZEV) program in January 2025 and close it once allocated funds were fully committed the following March. 

While 3 in 10 respondents reported delaying or reconsidering an EV purchase following the incentive pause, including up to $5,000 toward eligible EV and plug-in hybrid purchases, broader policy signals such as proposed changes to emissions regulations and the elimination of the carbon tax may also have influenced consumer views - particularly with respect to hybrids, where interest dropped from 26% to 17%.

EVs on ICE?

While upfront purchase costs emerged as the most significant deterrent for consumers, more than a quarter (28%) of study participants cited concerns about public charger reliability - spotty networks that cannot always be trusted in winter - and the possible incompatibility of nonstandard systems across the network. 

As government strategizes to catalyze investment in the sector as a whole - from rewarding Canadian-made and strengthening its trade regime to reskill workers and provide up to $3.1 billion to auto manufacturers to transition to electric - a reversal of fortune may already be factoring for the electric industry.²

Intent for the coming year is sure to be influenced by the recently released, five-year federal Electric Vehicle Affordability Program, which offers similar rebates to those seen previously. The $2.3 billion program will offer incentives of up to $5,000 for battery electric EVs and $2,500 for plug-in hybrids (PHEVs) made in Canada, or vehicles manufactured in a country with which Canada has a free trade deal with final transaction values of $50,000 or less.³

In addition, government and industry are set to tackle the issue of vehicle cost. Dozens of new electric models are expected to hit the market in 2026, offering the potential of lower prices.⁴

In addition, Canada has brokered a deal with China that would allow 49,000 Chinese-made EVs, which won’t be eligible for the rebates, to enter Canada per year at the 6.1% tariff rate, compared to the 100% surtax applied in October 2024, providing affordable options across the country.⁵

In further efforts, investment in electric infrastructure continues. The federal government had previously allocated more than $1.2 billion in funding to deploy charging stations across the country.⁶ And in February, $1.5 billion was earmarked through various channels, including the Canada Infrastructure Bank’s (CIB) Charging and Hydrogen Refuelling Infrastructure Initiative (CHRI), creating a more welcoming EV future for Canadians and addressing their concerns of charge station availability (38%) and long wait times (31%).⁷

Debunking misinformation, communicating with clarity and focusing on factors that directly influence confidence and decision-making could help with other factors that may have had consumers second-guessing electric, such as high public charging costs (32%). 

While there are differences based on vehicle efficiency, charging behaviour, billing systems and charging locations, electric power continues to boast relative price stability compared to ICE vehicles and has been estimated to cut fuel costs by half - resulting in significant life-of-vehicle savings.⁸