Canada’s federal electric vehicle (EV) rebate program, a key incentive for Canadians to switch to zero-emission vehicles, has been abruptly paused due to a lack of funding. The Incentives for Zero-Emission Vehicles (iZEV) program, which offered up to $5,000 in rebates, was initially slated to continue until March 31, 2025, but it ran out of money earlier than expected. This sudden halt has left many car buyers and dealerships scrambling, and raises questions about Canada’s commitment to its ambitious EV adoption targets.
The iZEV Program: A Brief Overview
The iZEV program was launched in 2019 with the goal of accelerating the adoption of zero-emission vehicles across Canada. The program provided:
- Up to $5,000 in rebates for the purchase or lease of new battery-electric vehicles (BEVs), hydrogen fuel cell vehicles, and long-range plug-in hybrid vehicles (PHEVs) with an electric range of 50 km or more.
- $2,500 in rebates for PHEVs with an electric range below 50 km.
These rebates were applied at the point of sale, effectively reducing the upfront cost of eligible EVs. To qualify for the rebate, eligible passenger cars had to have a base model manufacturer’s suggested retail price (MSRP) of less than $55,000, while higher-priced trims of those vehicles could be eligible up to a maximum MSRP of $65,000.
The program was designed to run until March 31, 2025, or until the allocated funds were exhausted. However, strong EV sales, driven by increased consumer interest and the growing availability of EV models, led to the funds being depleted sooner than anticipated.
Sudden Halt of the Program
The announcement that the iZEV program was being paused came as a surprise to many. On January 10, 2025, Transport Canada announced that the program’s funds had been fully committed, and they would no longer be offering rebates. This sudden stop has left many dealerships and consumers in a state of confusion. The program had become increasingly popular, with over 546,000 vehicles sold or leased with incentives since 2019, contributing to a significant increase in the ZEV market share in Canada.
According to Transport Canada, the program was not meant to end so abruptly. The program was scheduled to continue until March 31st or until the funds ran out. The program’s popularity is what ultimately led to its premature end.
Impact on Consumers and Dealers
The immediate impact of the iZEV program’s pause is being felt by both consumers and dealerships:
- Consumers: Those who were planning to purchase or lease an EV in the near future, with the expectation of receiving the rebate, are now faced with higher costs. Many consumers were caught off guard by the sudden halt, and are left wondering if they can still afford to switch to an EV.
- Dealers: Dealerships are now responsible for informing customers that the federal incentive is no longer available. They also must deal with the fallout from cancelled orders and confused customers.
Some automakers, including Ford, GM, Hyundai, and Nissan, have stepped in to offer manufacturer discounts to cover the shortfall, at least temporarily. However, this is not a long-term solution, and the future of EV incentives in Canada remains uncertain.
Canada’s EV Targets and the Program Pause
Canada has set ambitious targets for EV adoption. The federal government has mandated that:
- 20% of all new passenger vehicle sales must be zero-emission vehicles by 2026.
- 60% of new vehicle sales must be ZEVs by 2030.
- 100% of new vehicle sales must be ZEVs by 2035.
The iZEV program was a crucial tool for encouraging EV uptake, and its sudden pause raises questions about Canada’s ability to meet these targets. While some analysts believe that Canada can still meet its goals without the rebates, there is widespread concern that the pause will slow down the pace of EV adoption.
Environmental groups and industry organizations have expressed disappointment with the government’s decision to not provide additional funding for the program. They argue that the rebates are essential for making EVs more affordable and accessible to Canadians.
Rebate Program’s Success
The iZEV program has had some notable successes since its inception in 2019:
- Increased EV Sales: The program has contributed to a significant rise in EV sales in Canada. In 2023, zero-emission vehicles accounted for 11.7% of the market, a substantial increase from 3.1% in 2019. By the third quarter of 2024, ZEVs accounted for one in six new vehicles registered in Canada.
- Consumer Awareness: The program has helped raise awareness of the benefits of EVs, and has encouraged more Canadians to consider switching from gas-powered vehicles.
- Reduced Emissions: By supporting the adoption of ZEVs, the program has contributed to Canada’s efforts to reduce greenhouse gas emissions and fight climate change.
The iZEV program has seen a steady increase in the number of rebates claimed. In the first 11 months of 2024, the program paid out $927 million for more than 191,000 new EVs. The program had paid out $140 million in 2019 for 33,911 vehicles.
Provincial Incentives
While the federal iZEV program is currently paused, some provinces and territories continue to offer their own incentives for EV purchases. These incentives can be combined with the federal rebates when they are available, further reducing the cost of EVs. The provinces and territories currently offering ZEV-related incentives include:
- British Columbia
- New Brunswick
- Nova Scotia
- Newfoundland and Labrador
- Prince Edward Island
- Quebec
- Yukon
It’s important for consumers to check the specific incentives available in their region to get the most up-to-date information. For example, Quebec offers a rebate of $4,000 for BEVs registered in 2025, and the province has also offered a $600 rebate against the purchase and installation of a Level 2 home charging station.
What’s Next?
The future of EV incentives in Canada is uncertain. While the federal government has stated that the pause is not a policy shift, there are no immediate plans to restart the iZEV program. It is possible that the government may consider reallocating funds from other programs or recapitalizing the iZEV program in the future. There has been some suggestion that the program could resume if additional funding becomes available.
In the meantime, the pause in the federal rebate program has highlighted the importance of continued government support for EV adoption. It remains to be seen how this will affect Canada’s progress toward its ambitious ZEV sales targets.
Medium and Heavy-Duty Incentives
While the iZEV program for light-duty vehicles is paused, the Incentives for Medium- and Heavy-Duty Zero-Emission Vehicles (iMHZEV) program continues to operate. This program provides incentives for businesses and organizations to purchase or lease medium- and heavy-duty ZEVs, such as trucks, cargo vans, and shuttles. The iMHZEV program is scheduled to continue until March 31, 2026, subject to funding availability.
The program offers up to $200,000 at the point of sale to eligible Canadian businesses and organizations to purchase or lease medium and heavy-duty zero-emission vehicles.
Conclusion
The abrupt end of Canada’s federal EV rebate program underscores the challenges of balancing ambitious climate goals with financial realities. While the iZEV program has been a success in driving EV adoption, its sudden pause has created uncertainty for consumers and dealers. It remains to be seen if the government will reinstate the program, and how this will impact Canada’s progress towards its EV sales targets. In the meantime, it is critical for consumers to stay informed about available provincial and manufacturer incentives, and for the government to consider long-term, sustainable strategies to support the transition to electric vehicles.
