Demand for electric vehicles around the world appears to be on the decline, according to a recent survey from Shell that says cost and affordability are key concerns for buyers.
At the same time, the Canadian government confirmed this week that it is exploring a new consumer rebate for electric vehicles.
Statistics Canada reported that in the first quarter, or three months, of this year, 37,299 new zero-emission vehicles (ZEVs) were registered, making up 8.7 per cent of all new motor vehicle registrations, down more than 23 per cent compared with one year prior.
For the month of April, the latest update from Statistics Canada, EV sales accounted for just over 7.5 per cent of all vehicles sold in Canada.
Why are consumers less interested in electric vehicles?
New data shows that overall, consumers who haven’t bought an EV already say it’s primarily due to the costs of purchasing and owning one for the long term.
Shell Global released the results of a survey on Tuesday showing falling demand for electric vehicles, especially in Europe and the United States, with affordability the main reason cited, along with charging network reliability.
Meanwhile, the report shows that more than two-thirds of current electric vehicle owners reported feeling less worried about charging concerns than a year prior, and nearly three-quarters say the options and availability of public charging points have improved.
Although the Shell Global survey did not poll Canadians, there are consistent findings in other recent reports that did.
An AutoTrader survey conducted in 2024 found that non-owners in Canada are hesitant to purchase an electric vehicle due to “limited travel range/distance, inadequate availability of charging stations, higher purchasing costs, and the belief that EVs are unsuitable for cold weather.”
“Overall, while almost half of non-EV owners are open to buying an EV for their next vehicle, interest in EVs has declined for the second year in a row,” Tiffany Ding, director of Insights and Intelligence at AutoTrader, said last year.
AutoTrader also confirmed at the time that there was a direct correlation between lower gas prices and lower demand for electric vehicles, and vice versa.
In early 2022, demand for electric vehicles peaked worldwide as the price of traditional gasoline spiked and consumers sought alternatives.
This was in addition to strained supply chains, which made traditional gas-powered vehicles more expensive along with other products, and a lack of preparedness for the change in consumer demands made it harder for car companies to keep up.
By the end of 2022, things changed direction as supply chains caught up with demand, and affordability started to take a toll on households amid high inflation and rising interest rates.
The AutoTrader survey found that drivers instead were looking more and more to hybrid options, including plug-in hybrids, which offer the benefits of both a gas engine and electric by not relying as much or at all on a charging network and consuming less traditional gasoline overall.
Prices have also been gradually declining for some electric vehicles, so it is possible car companies are taking note of a drop in demand and cost concerns.
In some cases, this has also meant delaying plans for expanding EV production.
According to Rates.ca, the average price for a new EV in Canada as of December 2024 was $70,682, which is down 7.8 per cent from a year earlier, while used options averaged $42,045, a drop of 18.4 per cent from 2024.
Canadians can currently purchase some of the cheaper electric vehicle options brand new, starting at roughly $40,000. There is also the cost of charging, which may include the purchase and installation of a home charger, vehicle maintenance specific to electric vehicles, as well as depreciation over time, which differs compared with some gas-powered versions.
AutoTrader’s price index for the first quarter of 2025 pinned the national average price for a new vehicle at $65,564 — down almost three per cent year over year — and the national average price for a used vehicle at $36,823, a drop of 2.2 per cent year over year.
Could a rebate help?
Responding to reporters on Tuesday outside the House of Commons, Environment Minister Julie Dabrusin said “there will be a consumer rebate,” with few other details given for now.
“Will it be named, iZEV? That I can’t tell you,” Dabrusin said when asked by reporters earlier this week about a future rebate program for EVs.
This followed a meeting in which the Opposition Conservatives called for current electric vehicle mandates to be scrapped, including the Trudeau government’s goal to have all new consumer passenger vehicles and light trucks sold in Canada be zero-emission by 2035, citing concerns about the Canadian auto sector and U.S. President Donald Trump’s tariff policies.
As of now, Canada and the United States have imposed on each other a 25 per cent tariff on all automotive imports that do not comply with the current North American trade deal known as the Canada-United States-Mexico Agreement (CUSMA).
Canadian auto makers and other industry leaders also support ending these mandates, suggesting that the lack of consumer rebates or other incentives makes these goals unrealistic and a “policy failure.”
The iZev, or Incentives for Zero-Emission Vehicles, program was launched by the federal government in 2019 but ran out of funding by January of this year. Dabrusin’s comments suggest it will be replaced with a new strategy aimed at making EVs more affordable for some Canadians.
The iZev was intended to act in addition to provincial electric vehicle rebates where available.
Previously, the iZEV program offered up to $5,000 off the cost of a new electric vehicle, and over the nearly six-year life span, it cost the federal government nearly $3 billion.