British Columbia has decided to scrap the provincial sales tax (PST) exemption for used zero-emission vehicles (ZEVs) nearly two years earlier than initially planned.
The PST exemption for used EVs was first introduced in the 2022 budget as part of B.C.’s broader CleanBC initiative, designed to reduce greenhouse gas emissions and make environmentally friendly vehicles more accessible to consumers, with the ultimate goal of reaching 100% of new passenger car sales being zero-emission by 2035.
The PST exemption on used EVs was originally set to expire in 2027, and was seen as a crucial step in bridging the affordability gap between EVs and traditional internal combustion engine (ICE) vehicles.
However, the B.C. government has decided to accelerate the phase-out, citing financial constraints. According to Energy Minister Adrian Dix, the decision aligns with the government’s shifting fiscal priorities. The change takes effect on May 1, 2025.
“This makes sense now in terms of the priorities people have right now, the tariffs, and trying to prepare for that,” Dix stated. The Ministry of Finance estimates that ending the exemption early will save the province $48 million in the 2025/26 budget cycle and $54 million in 2026/27.
The decision to remove the exemption has drawn criticism from industry stakeholders who argue it could dissuade potential buyers from choosing EVs, particularly in the wake of the federal government’s recent suspension of its own EV rebate program.
While the loss of the used EV tax exemption will make used electric cars less attractive, B.C. continues to offer income-based rebates on new EV purchases. Whether these incentives will be enough to maintain the province’s rapid adoption of EVs remains to be seen.
However, the province has since also excluded Tesla products, like the Wall Connector and Powerwall and inverters from BC Hydro and CleanBC rebate program. When asked for the rationale behind the decision to exclude Tesla and no other U.S.-based companies, Premier David Eby said, “Yeah, it’s just for Tesla and it’s because of Elon Musk.”
