Canada’s auto market underwent a major shift in the second quarter of 2025, as hybrid vehicles surged ahead of zero-emission vehicles (ZEVs) to become the country’s leading alternative powertrain. According to new data from S&P Global Mobility released on Tuesday, hybrids captured a record share of new registrations, while the pace of EV adoption slowed despite higher overall sales volumes.
At the same time, Tesla — once the undisputed leader of Canada’s EV market — saw its market share collapse to single digits, falling behind
ZEV Growth Slows Despite Volume Increase
ZEVs, which include battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs), accounted for 9.2% of new light-vehicle registrations in Q2 2025, down from 9.7% in the previous quarter. This means roughly one in every 11 new vehicles registered was a ZEV.
Interestingly, while ZEV market share slipped, overall volume actually rose by 25.6% compared to Q1, though that growth lagged the broader light-duty vehicle market, which grew 32.3% quarter-over-quarter.
BEVs, in particular, showed mixed results: they represented 5.9% of registrations nationally, a decline from Q1’s 6.9%. However, BEV volumes still increased by 13.3%, suggesting demand exists but is losing ground to competing technologies.
Full Hybrids Claim the Lead
For the first time, full hybrids became the leading alternative powertrain in Canada, seizing a 12.9% share of the market. That figure surpasses the entire ZEV segment and underscores the growing appeal of hybrids as a “middle ground” for consumers.
When mild hybrids are included, hybrid vehicles as a whole captured 17.1% of registrations, outpacing all zero-emission options combined. The dominance of Toyota and Honda in this segment, with strong-selling models like the RAV4 Hybrid and CR-V Hybrid, has helped solidify hybrids as a mainstream choice.
Provincial Divide: Quebec vs. the Rest of Canada
The data reveals sharp contrasts across the country when it comes to electrification. Quebec continues to stand out as Canada’s EV leader, with 11.8% of new vehicles registered in Q2 2025 being zero-emission models. Unlike most provinces, BEVs remain the top alternative powertrain choice there, thanks to strong provincial incentives and a consumer base that has embraced electrification.
British Columbia tells a different story. Once a stronghold for EV adoption, the province has shifted decisively toward hybrids. Full hybrids now make up 16.9% of the market, surpassing BEVs, which hold just 9.9%. Ontario follows a similar trajectory, with full hybrids capturing 14.6% of registrations, while BEVs have slipped to only 3.7%.
Alberta highlights the national trend most clearly, with hybrids outselling BEVs by nearly seven to one. Full hybrids account for 12.3% of new registrations, compared to just 1.8% for BEVs.
Tesla’s Decline and New Leaders
Tesla, once the dominant force in Canada’s EV adoption, has seen its market share collapse. From commanding more than 46% of ZEV registrations in earlier years, Tesla’s share has steadily dropped to just 7.8% in Q2 2025. The decline in recent months is due to increasing prices from U.S. tariffs, the loss of provincial and federal rebates, and the impact of consumer sentiment toward the brand given CEO Elon Musk’s political activity in early 2025.
Highlighting the drop, Tesla’s year-to-date sales in Canada are 65.6% lower than they were during the same time period last year.
With Tesla’s decline, offerings from Ford, Chevrolet, Hyundai, and Toyota have filled the gap, while many consumers opted for hybrids instead of another EV.
Ford has become one of the big winners, now leading the Canadian ZEV market with 12.9% share. Chevrolet, after a breakout surge in late 2024, now holds 9.7%, while Hyundai and Kia remain consistent players reaching 8.7% and 9.5% respectively.
What It Means for Canada’s ZEV Mandate
The federal government has paused the 2026 ZEV mandate of 20%, but the target that all new vehicle sales must be ZEVs by 2035 remains, for now. However, Q2’s results raise questions about the path forward. If hybrids continue to grow at the expense of ZEVs, automakers and policymakers will face pressure to rethink incentive structures and infrastructure strategies.
The coming quarter will be pivotal in determining whether Q2’s hybrid surge was a one-off or the start of a longer trend and suggest that Canada’s electrification path will be less linear than once expected. While ZEV adoption continues to grow in raw numbers, hybrids are currently steering the mainstream market. Q3 will reveal whether that balance holds — or if a new wave of affordable EVs can re-energize Canada’s transition.
