Canada's Electric Vehicle Sales Decline in May Amid Subsidy Cuts

According to recent reports from the Canadian Statistics Agency, consumers in Canada purchased a total of 15,298 zero-emission vehicles in May, marking a 32.3% decrease from the 22,612 vehicles sold in the same month last year. The market penetration rate for zero-emission vehicles in Canada slightly increased to 7.9%, up about 0.5 percentage points from April, reaching its highest level since January. However, this figure is significantly lower than last year's peak, when zero-emission vehicles accounted for 12.2% of the market share in May 2024 and nearly 20% in December of the same year. The decline in sales is attributed to the Canadian federal government's suspension of a CAD 5,000 subsidy for each zero-emission vehicle on January 12 this year, leading to a continuous drop in sales. In addition to the indefinite halt of the Incentives for Zero-Emission Vehicles (iZEV) program by the federal government, several provinces, including British Columbia, New Brunswick, and Nova Scotia, have also terminated their local consumer subsidy programs this year, putting further pressure on zero-emission vehicle sales. Although the Canadian government has pledged to restart the zero-emission vehicle incentive program, no specific timeline has been provided yet. The term 'zero-emission vehicles' (ZEV) encompasses any motor vehicle that may produce no tailpipe emissions, including battery electric vehicles and plug-in hybrid vehicles. Overall, the performance of the Canadian automotive market continues to outperform last year. In May, Canadian consumers purchased a total of 194,524 vehicles, an increase of 5% compared to May 2024. In the first half of this year, driven by a surge in vehicle purchases ahead of tariff implementations and cash incentives from automotive manufacturers, new vehicle sales in Canada saw a modest rise of 4.3%, totaling 958,214 units, with a year-on-year increase of 6.4% in the second quarter. However, analysts warn that the Canadian automotive market will face challenges in the second half of 2025.