Return of the rebates: Canada brings back EV incentives

The Canadian federal government has brought back electric vehicle (EV) rebates as part of a revamped program.

For EVs with a final value of $50,000 or less, individuals and businesses can get up to $5,000 in government rebates for battery-electric and fuel cell electric vehicles or up to $2,500 for plug-in hybrid vehicles.

The program launched in February, around the same time some auto dealers revealed they were still owed tens of thousands of dollars from the previous rebate program under the last Liberal government.

Prime Minister Mark Carney’s announcement to return EV rebates attracted criticism, especially from across the aisle.

Shadow minister for industry Raquel Dancho and shadow minister for labour Kyle Seeback released a joint statement, saying Carney is not going far enough in supporting domestic auto workers.

“Mark Carney will have taxpayers subsidize other foreign-made EVs,” they wrote. “In fact, the rebate will now help American EV producers that relocated to the U.S. from Canada because of American tariffs.”

More than 546,000 EVs were incented through the last program from its start in 2019 to its suspension in 2025. 

A key barrier to buying an EV instead of a gas-powered car is high costs. So a rebate of a couple thousand dollars could help make EV purchases more affordable. This approach can work especially well during times of inflation, since people tend to postpone large purchases — but a rebate may encourage spending.

However, the program also faces trust issues from the dealers’ side, considering some of them haven’t received their reimbursements from the old rebate initiative. The program doesn’t seem to be fully integrated into the auto sector, which is why it alone can not change Canada’s situation with EVs. 

EV sales in Canada have also dropped, while they are going up in other countries.

Reasons for this can include a lack of consistency from the Canadian government, particularly by shutting down its last EV program after funding ran out. Cold weather in many regions of the country and huge driving distances also make EVs harder to maintain and manage. Plus, a widespread shift from gas cars to EVs can be difficult and expensive.

Canada is also ranked the fourth largest oil producer in the world, and gas here is generally more affordable than it is in many European countries.

In addition to the rebates, Carney slashed mandates requiring 60 per cent of all new cars to be electric by 2030 and 100 per cent by 2035. Instead, he decreased the targets to 90 per cent of new cars sold to be EVs by 2040. This shows that the government has started setting goals less forcefully by trying to encourage change.

Rebates can give drivers more freedom, but for the program to be most effective, it’s important to look ahead at other factors, too, including infrastructure development, industry support, and clear regulations.