By Annika Segelhorst and Elmira Aliakbari
The Carney government recently scrapped the federal electric vehicle (EV) sales mandate and replaced it with new regulations for tailpipe emissions. But the government is also reinstating consumer subsidies (with up to $5,000 for purchases of new EVs) and offering billions more in production subsidies to automakers.
As Ottawa retools its EV strategy with many of the same expensive and ineffective strategies, it’s important for Canadians to take stock of how government policies have so far shaped the market for EVs and whether these interventions have delivered tangible results.
For more than a decade, federal and provincial governments have laboured to promote EVs, spending tens of billions of dollars on production subsidies and consumer purchase incentives, along with the now-cancelled sales mandate (which decreed that all new passenger vehicles and light trucks must be zero-emission by 2035, with interim targets of 20 per cent by 2026 and 60 per cent by 2030).
Yet EV uptake has consistently fallen short of government expectations.
According to a 2024 report by the Parliamentary Budget Officer (PBO), governments in Canada spent or allocated up to $52.5 billion on EV-related projects between October 2020 and April 2024. Of this spending, roughly $31.4 billion (60 per cent) came from the federal government and $21.1 billion (40 per cent) from provincial governments, mainly Ontario and Quebec. The funding included support to build EV production facilities and tax credits for EV makers.
Even the federal government’s own estimates of the financial returns on these investments have been contested, raising doubts about whether these costly investments will ever deliver value for taxpayers. For example, in 2023, the federal government projected that subsidies provided for two EV battery plants in Ontario would pay for themselves within five years based on expected tax revenues from the projects. However, the PBO reached a very different conclusion, estimating that it would take closer to 20 years for taxpayers to break even.
Governments also offered consumer subsidies. Some provinces and territories provided generous rebates for EVs starting in 2010, with the federal government later launching a separate rebate in 2019, costing taxpayers at least $2.6 billion for the federal program alone. Altogether, EV purchasers could receive up to $12,500 in combined rebates between 2019 and 2025, before most programs expired in mid-2025.
Yet despite these substantial consumer and production subsidies, EV demand has remained weak. According to Statistics Canada, halfway through 2025, EVs represented only 8.6 per cent of new vehicle registrations. For context, the original mandate would have required at least 20 per cent of vehicles sold in 2026 to be EVs.
At the same time, several high-profile government-subsidized EV projects have already been scaled back, delayed or scrapped as automakers recognize that Canadian-made EVs simply don’t have a sufficient domestic or export market to support them.
In Ontario, for instance, Honda postponed a planned $15 billion EV manufacturing investment, Ford delayed EV production at its Oakville assembly plant, GM halted production of its BrightDrop electric delivery van in Ingersoll, and the list goes on. Despite $4.6 billion in committed funding from the federal and Quebec governments, Northvolt cancelled its Quebec battery production facility, costing the province $270 million in unrecoverable taxpayer funds.
Although governments (i.e. taxpayers) have spent tens of billions of dollars on subsidies and rebates to speed up EV adoption, Canada’s EV policies have failed to deliver the promised market transformation. In fact, EV adoption remains well below the government’s goals while taxpayers continue to bear the costs. Repeating the same expensive mistakes is unlikely to produce different results.
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