You may have heard this one before: governments are “forcing” people to buy electric vehicles. It’s how U.S. President Donald Trump described the efforts of his predecessor and some in Canada have similarly accused the feds and certain provinces of pushing their green agenda on uninterested drivers.
For the record, drivers are not uninterested. A new survey from Abacus Data commissioned by Clean Energy Canada finds that 45 per cent of Canadians are inclined to get an EV as their next vehicle and that share is considerably higher in urban areas (55 per cent in the GTHA and a whopping 69 per cent in Metro Vancouver) and among younger Canadians (57 per cent of those under 30).
But there’s no doubt Canada is starting to fall behind. By the end of this year, more than 1-in-4 vehicles sold worldwide will be electric, up from 1-in-5 in 2024. Here in Canada, EVs made up 15.4 per cent of car sales last year, but due to a (hopefully temporary) pause of EV incentives nationally and in B.C., 2025 could go down as the first year that EV sales decline in Canada — even as they accelerate globally.
Which raises the question: Canadians are some of the richest inhabitants on planet Earth, so why are we turning into a technological backwater? More to the point, why can we not access so many of the lower-cost, high-quality EVs being sold to consumers in so many other countries?
The short answer is Canada’s walled-off, uncompetitive car market.
The most commonly known cause of this is Canada’s decision to align itself with the U.S. in placing a 100 per cent tariff on Chinese EVs last year, a move meant to placate Trump that has obviously not worked as he continues to impose unnecessary harm on our auto, steel and aluminum sectors.
Europe, by comparison, settled on tariffs of 8 per cent to 35 per cent after a long investigation; a proportionate response meant to even the playing field for its local automakers. The U.S. and Canada (though not Mexico) instead erected a veritable wall. Canada’s canola, seafood and pork industries have since become collateral damage as a target of Chinese retaliation.
As analysis from BloombergNEF recently concluded, “there’s a clear factor dividing which countries are seeing faster EV adoption and which are going slower: openness to Chinese carmakers.”
And this part is key: “Even in markets where Chinese automakers make up a relatively small share of total EV sales, their presence forces competition and pushes incumbent automakers to put real effort into their EV launches.”
The critical D-word here is not displacement but disruption. The idea that competition drives everyone to up their game is as old as Adam Smith.
In the above mentioned Abacus survey, 53 per cent of Canadians say they would prefer “a lower tariff that balances protection for Canada’s auto industry with improving affordability,” with another 29 per cent preferring no tariff at all on Chinese EVs. Only 19 per cent want to keep a 100 per cent tariff in place.
But China is not the only important disrupter. Another idea advocated by the Canadian Automobile Dealers Association sounds like a no-brainer when said aloud: vehicles approved for European roads should be approved for Canadian ones. Dealerships get more cars to sell and Canadians enjoy more choice.
European models like the compact Renault 5, a well-reviewed electric hatchback, would help fill a current void in our limited car market. The idea is a popular one, with 70 per cent support among Canadians and only 10 per cent opposition.
Yes, jobs in Canadian manufacturing are vitally important. But Canada can strike a balance between opening up the EV market the right amount, investing in while also fairly regulating automakers and incentivizing consumers. Indeed, Canada’s Electric Vehicle Availability Standard effectively applies some of the pressure that would otherwise exist in a completely competitive environment on behalf of the consumer.
There are other ways to encourage more affordable EV options as well, such as putting a relatively tight price cap on EV rebates or perhaps even offering a bonus rebate for cars coming in under $40,000.
Canada could also explore easing tariff pressure further if, for example, Chinese-based automaker BYD agreed to build EVs in Canada, employing Canadian auto workers, engaging in technology transfer and creating demand for all the upstream critical minerals and battery components we have to offer.
Finally, it’s not the case that legacy automakers can’t compete. GM is now selling EVs profitably and the company says it will soon bring back its most affordable offering, the Chevy Bolt, no doubt responding to the threat of low-cost Chinese EVs. GM’s $40,000 EV was once the most popular non-Tesla electric car in Canada.
A more competitive Canadian market might just compel GM to prioritize Canada as the first new Bolts roll off factory lines. The question, after all, is not whether Canadians want EVs, but whether we’re presenting them with the best options.
This post was co-authored by Joanna Kyriazis and first appeared in the Toronto Star.
