To be sure, the Canadian automotive industry is at a very important crossroads. Perhaps it is simply swimming against the tide of the federal government’s own aggressive mandate for 100 percent EV sales by 2035. After a recent meeting with Prime Minister Justin Trudeau, these leaders raised alarm over their ability to meet those targets. They pointed to the painful drop in EV sales experienced in the first half of 2024 as a key driver of their apprehension.
The government’s yearly sales quotas for EVs have increased every year, achieving a record high of 18.29 percent in December 2023. Sales plummeted to 11.95 percent in January 2024 after the iZEV rebate program, which provided $5,000 off the cost of a new EV, was suspended due to depleted funding. Sales kept dropping through February and March, down to – 6.8 percent and – 6.53 percent, respectively. They posted a modest bounce back in April.
Industry Concerns Over Sales Targets
Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association, along with executives from Ford Canada, Stellantis Canada, and GM Canada, conveyed their worries to the Prime Minister about the unrealistic nature of the current EV mandate. Kingston stressed that just reinstating the rebate program would not be enough to achieve the governments’ ambitious targets.
“Comments from ministers in the public suggesting that an EV incentive is coming back are extremely damaging.” – Brian Kingston
Kingston pointed out that if the government intends to reintroduce an incentive, it must provide clarity regarding the timeline and specifics. He said that too much uncertainty would cause people who already want to buy EVs to wait.
“It’s a huge problem. If the government is going to bring it back, they’ve got to be clear about that with the plan and the timeline. And it has to be quick because if you tell people it’s going to be in three months, then no one will purchase an EV for the next three months.” – Brian Kingston
The industry is particularly concerned about the costs of having to comply with the required targets. Kingston noted that to get to the goal of 20 percent EV sales by 2026 requires EV manufacturers to sell roughly 180,000 more units. Reinstating a rebate again would see those costs approach a billion dollars.
Government Response and Future Prospects
Industry concerns led Environment Minister Julie Dabrusin to intervene. Looking to electric vehicles, she concluded her speech by announcing that Ottawa is working on restoring a popular rebate program for electric vehicles. At the same time, Industry Minister Mélanie Joly announced that the federal government is considering offering “incentive programs” for EVs.
Despite these efforts, a few titans of the industry are claiming that current regulations should be sufficient in meeting Canada’s emissions-reduction targets. Kingston challenged the need for yet another federal mandate in addition to all the existing regulations.
“Why would you put an EV mandate on top of your existing (greenhouse gas) regulations? It makes absolutely no sense.” – Brian Kingston
Kingston and other executives urged the government to reconsider its approach to EV policies and prioritize collaboration with automakers to facilitate a smoother transition toward electrification.
The Road Ahead for Electric Vehicles in Canada
As the Canadian government navigates its path toward achieving its ambitious EV targets, the automotive industry remains cautiously optimistic but demands clearer communication and actionable plans. Striking that balance is perhaps the greatest challenge. This is compounded by the fact that consumer interest takes time to develop when incentives are drastically altered.
