New research shows Canada’s EV sales mandate, consumer incentives, and more affordable vehicles can all drive higher rates of adoption.
A new federal automotive strategy is in the works and could be released any day. A central question is how the federal government treats electric vehicles (EVs). There has already been considerable discussion in the media about whether the EV Availability Standard will be paused or cancelled altogether, alongside decisions on new consumer subsidies and investments in charging infrastructure. The opening of the Canadian market to Chinese EV imports is also part of the mix.
In this Insight, we ask which of these levers matters most. Our recent analytics suggest these tools work in complementary ways, and that an incomplete policy package will underdeliver on intended outcomes.
Canada’s EV incentives have driven significant sales
To compare supply and demand effects, we looked across provinces with and without EV availability standards, and with subsidies in place.
Availability standards matter on the supply side because they incentivize automakers to direct their latest EV models into dealer showrooms in Canada. But supply alone does not guarantee uptake. Quebec provides a useful stress test. Even with an availability standard and significant charging infrastructure in place, the removal of provincial and federal EV subsidies in early 2025 led to a sharp drop in sales.
The lesson is clear. Even when supply exists, prices largely drive demand. The federal subsidy withdrawal in 2025 removed about $5,000 in cost savings per vehicle, whereas the Quebec pause removed $3,000 in savings per vehicle.
Across provincial and federal subsidy changes between 2018 and 2025, the data shows that every $1,000 change in price moves EV demand by about 11.5 per cent nationally. You can’t buy what’s not available, but you also won’t buy what’s unaffordable. The two factors work together.
Figure 1: EV sales dropped nearly 60% when rebates were removed
More affordable EVs can drive more demand
In this context, Chinese-made EV imports in Canada act as a demand-side driver, partially offsetting the loss of subsidies, especially in the low-cost vehicle segment. Using econometric analysis of how EV prices and subsidies affect sales, we estimate that allowing 49,000 Chinese EVs into the market leads to roughly 17 per cent growth in national EV sales, at least initially.
The biggest impact is on affordability. Total consumer savings are on the order of $330 million, concentrated in the lowest-cost segment where savings range from $7,000 to $12,000 per vehicle. Chinese EVs capture about 23 per cent of the market, displacing roughly 18,000 sales of other EVs plus induce new demand.
The key insight is that Chinese imports help affordability and induce some new demand, but they are not game-changing for emissions outcomes.
Figure 2: Making EVs cheaper is a primary driver to higher EV adoption
The takeaway from the analytics is straightforward. EV availability standards set the floor by ensuring supply. Low-cost imports and domestic supply reduce the affordability hit. Targeted subsidies—to make EVs more affordable up-front—are still needed to close the remaining gap, while charging infrastructure builds confidence as the market matures increasing uptake. Together, these levers determine not whether EVs exist in Canadian consumer markets, but how quickly and cheaply adoption can scale up.
