Canada’s EV Market: Lots of availability and waning demand improve affordability

Baris Akyurek is the vice-president of insights and intelligence at AutoTrader.

Among the most frequent questions I receive from Canadians are about the electric vehicle market. With the growing attention on EVs, many people are curious about various aspects: How is demand trending? Are there enough EVs available for everyone who wants to buy one? What’s happening with prices? And how will we meet the federal mandate timelines?

Here is what our research and analyses suggest:

Demand

At AutoTrader, we closely monitor trends in the Canadian automotive market to keep a finger on the pulse of consumer behaviour. Over the past few years, we’ve conducted surveys aimed at gaining a deeper understanding of the EV landscape, focusing on purchase intent, consideration, barriers to ownership, attitudes toward EVs and the information sources Canadians rely on when considering an EV. One key question we ask is whether car shoppers would consider buying an electric vehicle, which for this survey includes battery-electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) and regular hybrids, for their next vehicle.

The consideration rate for those types of cars decreased to 46 per cent in 2024, down from 56 per cent in 2023 and 68 per cent in 2022. This suggests that demand for electric vehicles over all is indeed on the decline, although it’s worth noting that nearly half of Canadians still express interest in purchasing one. When we break down the data by province, Ontario shows the largest decline, primarily owing to the absence of incentives or rebates to offset the higher initial cost of electric vehicles. That said, we’re seeing a decline across the country.

However, interest in all types of hybrid vehicles, which use a combination of electric motors and gasoline, is increasing. Of the people who are considering an electric car, 62 per cent are considering a hybrid in 2024, up from 52 per cent in 2023. Interest in PHEVs specifically increased to 60 per cent in 2024, from 54 per cent in 2023. On the flip side, interest in BEVs, which rely entirely on electric power and must be plugged in to charge, decreased to 50 per cent from 53 per cent.

This shift indicates that consumers are leaning toward “best-of-both-worlds” options. The primary concern driving this trend remains range anxiety, with 79 per cent of respondents indicating they worry about how far they can drive on a single charge. This is followed by concerns about the availability of charging stations (72 per cent) and the higher initial costs associated with purchasing an EV (68 per cent).

Supply

Before diving deeper into supply, it’s important to recall that the Canadian government has decreed that by 2026, 20 per cent of new light-duty vehicle sales must be zero-emission vehicles (ZEVs), increasing to 60 per cent by 2030, and 100 per cent by 2035. ZEVs include BEVs, fuel-cell electric vehicles and PHEVs. To meet these ambitious targets, an adequate supply of new ZEVs is essential, and we’re currently witnessing a significant increase in inventory. As of the end of October 2024, EV inventory on AutoTrader.ca (new and used, including all types of EVs) is up by 94.8 per cent year-over-year (up 180 per cent in Quebec). This indicates that supply is not currently an issue and is moving in the right direction as we work to meet these targets.

Prices and incentives

Prices in the ZEV market have generally followed the basic rule of supply and demand. In October, the average price for a new ZEV was $73,250, and for a used one was $45,850, reflecting year-over-year declines of 9.2 and 14.8 per cent, respectively.

However, the pricing landscape for EVs is complicated by provincial subsidies. Some provinces, like Quebec, offer generous rebates, while others do not. Quebec currently provides a $7,000 rebate that will decrease to $4,000 in 2025 and to $2,000 in 2026, ultimately phasing out by 2027. With the anticipated increase in demand over the short term, automakers have been allocating even more EVs to Quebec. The result is that BEV sales were up by almost 75 per cent in the second quarter, compared with a national increase of 36 per cent, according to Statistics Canada. If we exclude Quebec from the analysis, the overall growth in EV sales across the rest of the country would be a rather modest 9.3 per cent. This trend highlights how financial incentives can drive consumer behaviour and sales growth in specific regions.

The puzzle

One question that perplexes me is the disconnect between aggressive sales targets and the reduction of existing provincial rebates. If the goal is to meet ambitious targets, wouldn’t it make sense to continue providing sales incentives to consumers? Our research indicates that 94 per cent of potential EV buyers are motivated by these incentives, with 30 per cent factoring in rebates ranging from $4,000 to $6,000. Eliminating these incentives could hinder our progress toward achieving these targets.

According to the Government of Canada’s website, federal rebates are currently set to expire on March 31, 2025. Proponents of electric vehicles are hoping the program will be extended, and fear that allowing the program to expire would be counterproductive.

It’s clear that the road to electrification is complex. While EV purchase intent has dipped again this year, other factors, such as increased supply, declining prices and sales growth offer positive signals for EV adoption. It is essential that we continue to accelerate our efforts and avoid creating additional obstacles if true electrification is the ultimate goal.

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