After years of rapid growth, EV sales in Canada took a nosedive last year.
But Friday’s announcement that Canada would dramatically lower its tariffs on Chinese EVs means inexpensive models should be in showrooms soon.
Auto experts, however, warn that Canadians shouldn’t hold their breath for a $10,000 EV, as Chinese imports will be limited in number and won’t be as cheap as they are elsewhere.
While a welcome sign for the EV market, their arrival won’t be a panacea, since several systemic factors behind last year’s sales drop remain unaddressed.
What happened to EV sales in 2025
Last year’s EV sales drop in Canada stands out as an anomaly. Worldwide, EV sales grew by 20 per cent in 2025, surpassing 20 million vehicles for the first time, and now account for more than one in four of all car sales globally.
“EV adoption accelerated in 2025, breaking records in almost every market — except here,” said Joanna Kyriazis, director of policy and strategy at Clean Energy Canada.
EV registrations, a proxy for new cars sold, rose by 33 per cent in Europe, 17 per cent in China, and 48 per cent in Africa, the Middle East and Asia in 2025, the consultancy Benchmark Mineral Intelligence reported this week.
“It’s not just China and Europe. Even developing markets like Brazil, Thailand, Nepal and Ethiopia are totally leapfrogging us,” Kyriazis said.
In the U.S., where government hostility to climate policy and clean technology has led to the elimination of billions of dollars in public subsidies and the cancellation of major infrastructure projects, EV sales dropped, but by only two per cent.
While the final numbers for Canada are not out yet, sales plummeted by 32 per cent over the first three quarters of the year — a number that is likely to get worse when 4th quarter numbers come out, due to record EV sales at the end of 2024.
As a proportion of all cars sold in Canada, EVs reached 18 per cent in December 2024, but were cut down by more than half to less than 9 per cent in 2025.
“The global trend is clear. Canada is on an island with the U.S. here,” said Kyriazis.
EVs are more expensive in North America
The U.S. move to slap 100 per cent tariffs on Chinese-made EVs in 2024 prompted Canada to follow suit, limiting the inexpensive EV options available to North American consumers.
Meanwhile, cheaper Chinese EVs are driving worldwide sales to new heights, making inroads in established markets, like Europe, as well as developing ones, like Brazil. Because these inexpensive makes were not available in Canada, EVs were not cost-competitive with gas-powered vehicles and people were less likely to buy them.
Now that Chinese EVs are on their way, that should mean cheaper options for Canadians. But experts warn not everyone will be able to get their hands on one since they will be limited to 49,000 units — less than 20 per cent of the 270,000 EVs sold in 2024. While this number is set to grow to 70,000 imports by 2030, the deal precludes a Chinese takeover of the Canadian EV market.
Also, the cheapest Chinese models will not be available. The BYD Seagull, for example, gained attention for its $10,000 price tag in China but retails for the equivalent of $26,000 in Europe after it has been upgraded to meet safety standards.
Still, that’s far less than the cheapest EV currently available in Canada, which costs about $40,000, and there’s some hope that the Chinese EVs will spur other automakers to offer more inexpensive models.
Policy confusion remains unaddressed
The lack of Chinese EVs doesn’t explain why sales dropped so precipitously in 2025, says Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers’ Association (CVMA).
Canada’s EV adoption strategy rested on three policies: a consumer rebate, a push to install chargers and a manufacturer’s mandate, requiring a certain proportion of sales to be EVs.
“In 2025, the government failed on two fronts,” Kingston said, eliminating the $5,000 EV rebate and falling far short of its target of 40,000 new public chargers per year.
This leaves the stick of an EV sales mandate in place, without the carrot policies needed to support adoption, he added.
“Mandating EV sales politicized the technology. If Canadians feel they’re being told to buy EVs, you’ll get pushback. That’s a bad outcome,” he said.
Daniel Breton, president and CEO of Electric Mobility Canada, doesn’t see pushback as the culprit behind the sales plunge. He says it’s due to policy uncertainty.
After the EV rebate was abruptly cancelled over a weekend last January, successive government ministers promised that a new public subsidy program would be announced shortly. Twelve months later, many prospective EV buyers continue to delay their purchase, awaiting the new rebate.
“It’s been the chaotic management of the (rebate) program that all of a sudden hit the brakes,” he said, taking the EV rebate “from $5,000 to zero in a matter of days,” and leaving buyers in the lurch.
Breton says the lack of EV sales in 2025 hides a build-up demand that will be released once the promised policy materializes.
“When rebates come back, sales will shoot up because so many people are waiting to buy,” he said.
What comes next, now that Carney has scrapped the tariff?
North American carmakers have flip-flopped on EVs, saying they’re all in before pulling back and delaying production.
Now they will have to compete with cheaper and more advanced Chinese EVs, Breton says, and they’re caught without models that can’t compete.
“They’ve been caught dragging their feet on EVs, and they want a wall around North America to protect them,” he said.
The CVMA’s Kingston says that the smallest, cheapest EVs that have proven popular in Europe aren’t going to win out in Canada.
“Canada is a massive country. It’s a cold country. These present real issues for EVs,” he said. “We just don’t have the infrastructure to support them fully.”
“Electrification is happening. It remains the future. It’s happening globally. It will happen in North America, but the pace of adoption will be slower because of unique conditions here.”
With the first Chinese EVs set to arrive in Canada, 2026 promises to be the year in which the future of the car industry will be decided. In criticizing the deal, Premier Doug Ford echoed the fears of many that the local auto industry will be decimated. While others say a balance between their technology and our economy will inevitably be found — much like it was in the 1980s with Japanese carmakers.
Either way, EV sales are likely to bounce back — once the price is right.
Correction – Jan. 16, 2026
This article was updated from a previous version to note that the U.S. move to slap 100 per cent tariff on Chinese EVs was first imposed in 2024, before the second Donald Trump administration.
