Canada’s electric vehicle (EV) revolution hit the brakes in the first quarter of 2025, with the latest data revealing a sharp decline in zero-emission vehicle (ZEV) registrations across the country.
According to new data released by S&P Global Mobility on Thursday, ZEVs accounted for just 9.7% of new light-duty vehicle registrations—down significantly from 18.9% in Q4 2024 and 12.5% in Q1 2024.
This 19.5% year-over-year decline in ZEV volume comes despite a 3.2% overall increase in total light-duty vehicle registrations, suggesting a consumer shift back toward internal combustion engine (ICE) vehicles and hybrids after provincial and federal incentives on ZEV purchases were removed, some of them temporarily.
Key Contributors to the Decline
Several market forces and policy shifts are to blame for the softening demand:
- Federal iZEV Incentive Depletion: The abrupt end of the federal iZEV program’s $5,000 rebate removed a major purchase incentive.
- Quebec Policy Changes: Quebec, historically Canada’s largest ZEV market, reduced its provincial rebate from $7,000 to $4,000 and paused the program entirely for two months. The result was a staggering 65% drop in BEV sales in the province.
- Tariff Pressures: Anticipation of Canada’s new 100% tariff on Chinese-made EVs and 25% tariffs on certain U.S. imports also impacted sales.
- Economic Headwinds: Inflation, high interest rates, and geopolitical tensions have suppressed consumer spending on big-ticket items like EVs.
- Lingering Consumer Concerns: Only 28% of Canadians say they’re likely to consider an EV, citing cost, range anxiety, and lack of charging infrastructure as key barriers.
Tesla’s Shrinking Market Share
Once a dominant force in Canada’s EV landscape, Tesla now represents less than 10% of all ZEV registrations as of April 2025, down from nearly 50% just two years ago. Rising competition from Hyundai, Chevrolet, and Ford—combined with changing consumer perceptions and fewer incentives—have rapidly eroded Tesla’s Canadian market share, according to S&P Global data.
Provincial Trends
- British Columbia continues to lead in ZEV adoption rate with 19.2% in Q1 2025. However, this marks a 14.4% drop from Q4 2024, largely due to the end of provincial ZEV incentives.
- Quebec, which accounted for 32.7% of Canada’s total ZEV volume, saw its ZEV market share fall from 42.0% in Q4 2024 to just 14.8% in Q1 2025.
- Ontario showed more stability, with ZEV market share dipping only slightly to 7.3% in Q1 2025.
Interestingly, hybrid electric vehicle (HEV) registrations continued to rise, reaching 17.2% nationally—suggesting consumers may be opting for transitional technologies rather than going fully electric.
Medium and Heavy-Duty Sector: Mixed Progress
While light-duty ZEVs struggled, Canada’s medium- and heavy-duty ZEV market showed pockets of growth. Notably:
- Class 3 electric vehicles surged by over 650%, from 32 units in Q1 2024 to 243 in Q1 2025.
- Class 8 electric trucks doubled from 41 to 84 units year-over-year.
- Other classes such as hybrid Class 8 and Classes 6 and 7 saw steep declines, highlighting uneven adoption across segments.
What’s Next?
Despite the Q1 downturn, there are signs of recovery. In April 2025, ZEV registrations in Quebec jumped 109% month-over-month after incentives were reinstated. Analysts expect that ongoing infrastructure development, regulatory targets for 2035, the re-introduction of the federal iZEV rebate, and new affordable EV models will gradually reignite momentum in the coming quarters, as Canada works toward its goal of 100% zero-emission new vehicle sales by 2035.
