The Canadian government will soon be putting an indefinite pause on the rebates eligible for the purchase of zero emission vehicles due to the program funds almost being depleted.
Transport Canada announced on Thursday there is only $71,817,104 remaining in the iZEV program, representing approximately 16,000 ZEVs. The Government offers up to $5,000 in rebates for the purchase of EVs and has a mandate to have EVs represent 20 percent of all new vehicles sold by 2026. The iZEV Program was scheduled to conclude on March 31, 2025, or when the allocated funds were fully exhausted.
The announcement indicated that once all funds are depleted, the program will pause and Canadians will not be able to receive incentives when purchasing/leasing new eligible vehicles through the iZEV Program. The release also said prior to this, requests from dealerships and authorized sellers may be submitted as per usual until further updates are communicated.
It is the latest in a series of financial moves announced in the country that will impact sales of electric vehicles. The Quebec government made a surprising announcement in mid-December that it was suspending its rebate program, which also includes EV chargers and installation, from February to the end of March.
In B.C., dealers are feeling the effects of the decision by the provincial government to change the rebate program, funded by B.C. Hydro, on the purchase of new EV sales from $55,000 to $50,000. EV sales dropped by about 66% from August to December in 2024 relative to the same time period last year.
Concerns from the Canadian automotive community about the federal government’s decision came swiftly. Tim Reuss, President/CEO of the Canadian Automobile Dealers Association, said the decision is “particularly frustrating for dealers who have done their part in building the infrastructure and resources” required to support the EV transition.
“Now we are seeing governments at both the federal and provincial levels decommitting from a difficult and costly process that they, themselves, instituted,” said Reuss. “There is obvious hypocrisy in imposing ambitious ZEV targets and affiliated penalties on the industry and consumers when the Government is showing a clear lack of motivation and support to meet these goals.”
He added the announcement also “highlights” a troubling lack of preparedness and foresight.
“By failing to secure adequate funding for a transition it actively promoted, the Federal Government has created uncertainty for both consumers and the automotive industry,” said Reuss. “Cutting short such a critical initiative while maintaining aggressive 2025 and 2030 ZEV targets send a contradictory and destabilizing message.”
He said the CADA urges the federal government to address this funding shortfall immediately and to develop a consistent, long-term strategy for supporting ZEV adoption.
“Canada’s climate goals can only be achieved through sustained, reliable commitments — not through sporadic and reactionary measures,” said Reuss
Flavio Volpe, President of the Automobile Parts Manufacturers’ Association, told Canadian auto dealer that it is “unfortunate” that the program spent the majority of its money on Tesla imports from China and not in supporting and developing opportunities for local manufacturing and sourcing of EVs.
“Enthusiast groups, masquerading as industry advocates, convinced the Minister of Environment that country of origin was irrelevant, even though we warned them loudly that China’s objectives weren’t noble,” said Volpe. “We are looking forward to recalibrating industrial policy on EVs in the future.”
David Adams, President of Global Automakers Canada, said the decision is disappointing, coming on the heels of the decisions by the Quebec and B.C. Governments.
“All this doesn’t spell success for EV adoption and uptick,” said Adams.
He added that the federal government should be able to put an exact end date on the calendar when the program expires to help consumers, dealers and manufacturers.
“From my perspective it’s also a little bit disingenuous to say that it’s being paused,” said Adams. “The reality is there doesn’t seem to be any way for it to be recapitalized any time soon. The government is going to be coming back after the end of prorogation and from everything being telegraphed in the media there is going to be a confidence vote, the government will fall, there will be an election and a Conservative win. They may change their tune but they’ve been fairly clear they don’t plan on putting the incentives in place, especially with the lumpiness of the sales over the last number of months are going to be critical to ensuring the consumers continue to purchase these vehicles.”
Daniel Ross, Canadian Black Book’s Senior Manager of Industry Insights, said he expects sales of new EVs in 2024 to be between 12%-14% from 10.8% in 2023.
Ross said he is surprised by the federal decision given that it was going to have to go through the renewal process in March.
“Claims had been up toward the latter part of last year,” said Ross, who said it was influenced by the Quebec decision to suspend its program for two months. “This is definitely going to be a damper on the first quarter of EV sales in Canada in 2025. It’s not going to be good for EV adoption until we actually figure out what’s going to happen with the renewal process.”
Brian Kingston, President/CEO of the Canadian Vehicle Manufacturers’ Association, said Transport Canada’s pause in the iZEV program will significantly reduce ZEV sales in Canada.
“This comes at the same time as a slowdown in the buildout of public charging infrastructure that is already weighing on the pace of the transition to electric,” said Kingston. “As a result of these developments, the federal government’s mandated ZEV sales targets are increasingly unrealistic. The federal government needs to undertake an urgent review of Canada’s Electric Vehicle Availability Standard to evaluate its feasibility.”
Electric Mobility Canada (EMC) said it does not support this decision, believing it will jeopardize the goal of reaching the 20% target, which it said is well on its way to reaching and even surpassing.
“Recently, EMC made a series of recommendations to the federal government that would ensure more Canadians have access to the iZEV program for a longer period,” said Daniel Breton, President and CEO of Electric Mobility Canada, in a media release. “Now, instead of a manageable and predictable program, Canadians who want to make the switch to electric mobility are left with very little time to take advantage of the incentive, which is the exact opposite of a predictable and sustainable program for consumers and industry. We hope that the government will consider a program renewal under new and more sustainable conditions for all Canadians like we proposed.”
He also said the province’s decision to suspend the rebate program is “really disrupting” the Quebec market.
“For two months, sales are basically almost going to stop,” said Breton.
