Canadians aren’t paying more for electric vehicles (EVs) because affordable EVs don’t exist. They’re paying more because too few affordable models make it to Canadian dealerships.
The federal government has made electrification central to its vision for Canada’s economic future. Back in February, they announced that a new vehicle emissions standard would be developed, which is the clearest test yet of whether that vision will translate into policies that deliver for Canadians. However, the government has now delayed the standard, leaving Canadians waiting longer for policies that can help bring more affordable EV options to market.
Canadians need affordable models, more choice and a market where manufacturers compete for their business. Delaying a strong vehicle emissions standard leaves Canada further behind that goal.
Affordable EVs in Canada Remain Hard to Find
Strong vehicle emission standards, that is, rules that limit how much pollution new vehicles can produce, give automakers the long-term certainty they need to invest in the Canadian market. Clear, ambitious standards create a predictable path for EV sales, encouraging manufacturers to compete by bringing more affordable models to Canada.
In Europe, consumers can choose from more than 20 EV models priced below $40,000. In Canada, there are fewer than five. The average price of an EV here remains about $65,000, putting many models out of reach for middle-income households.
Canada’s EV Supply Chain Needs a Strong Domestic Market
Canada and Ontario have invested billions to build a domestic EV supply chain, establishing Canada as part of the global EV industry. But as EV sales have slowed amid trade tensions and policy uncertainty, manufacturers have delayed projects and production plans. Those delays exposed a weakness in Canada’s strategy: we’ve invested heavily in building vehicles, but far less in ensuring Canadians can afford to buy them.
With EVs, consumer choice and the supply chain are connected. A strong automotive industry depends on a strong domestic market. If Canadians can’t afford the vehicles we’re building, the market will not fully develop. A successful EV industry needs both production and local demand.
How EV Incentives Can Make Electric Vehicles More Affordable
We’ve already seen how policy can improve affordability. When the federal government reinstated its $5,000 EV incentive program, combined with higher gasoline prices, buying an EV became roughly $12,000 more attractive for many consumers. Incentives helped create demand.
Automakers also responded to those incentives. Recently, Subaru lowered the Canadian price of its Solterra so it qualified for the federal EV incentive, Kia priced its EV5 to qualify for the program, and Tesla introduced a lower-priced Model Y Standard to its Canadian lineup. These examples show that policy can influence not only what vehicles are sold in Canada, but how they’re priced.
More competition means more models, and more choice puts downward pressure on prices. A strong emission standard through 2035 can bring down average EV prices below $45,000. Policies that encourage competition give automakers a stronger incentive to bring more affordable models to Canada. As prices come down, more Canadians can make the switch, strengthening the business case for manufacturers to invest in the Canadian market.
Consumers also benefit from lower operating costs. Over a decade, a typical Canadian driver can save between $23,000 and $32,000 by choosing an EV, thanks largely to lower fuel and maintenance costs. The challenge is making sure more Canadians can access these savings.
Balancing EV Trade Policy, Competition and Canadian Manufacturing
Trade policy is also a part of this conversation. Canada’s tariffs on Chinese-made EVs reflect valid concern around unfair trade practices and the need to support domestic manufacturing. We must protect Ontario’s auto workers and new EV investments, as they are critical to Canada’s economic future. But Canada should also recognize an important lesson from global automakers: they respond to competition.
Chinese manufacturers have accelerated the global race to produce lower-cost EVs, forcing established automakers to introduce more affordable models and improve their offerings. Protecting manufacturers operating in Canada should not mean insulating automakers from the competitive pressure that delivers better choices and lower prices.
Canada Can Build EVs and Make Them More Affordable
Canada doesn’t need to choose between building EVs and making them affordable. We need policies that do both. That means supporting domestic EV manufacturing, maintaining incentives that help households make the switch and adopting a strong vehicle emissions standard that encourages automakers to bring more affordable models to Canada.
