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The federal government last week ended its 100-per-cent-EV-by-2035 program and announced restoration of federal rebates for electric vehicles, but with some interesting twists that will reward trade-friendly countries and encourage Canadian manufacturing.
Perhaps most importantly, it eliminates what would have been an albatross around the neck of an automotive industry that had no hope of meeting tight mandates without reducing overall vehicle sales.
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To qualify for the rebate — $5,000 for a full EV and $2,500 for a plug-in hybrid — a vehicle must be both less than $50,000 and produced in a country with which Canada enjoys a free trade agreement. EVs produced in Canada are exempt from the $50,000 cap.
Which means the Dodge Charger and Chrysler Pacifica PHEV — the two EVs currently produced in Canada — will qualify, despite the Charger’s $54,000 price tag and the Pacifica PHEV’s $62,000.
The requirement for a free trade agreement helps put some pressure on the United States as Canada, the U.S. and Mexico approach a review of the 2018 trilateral trade deal.
A number of U.S.-made EVs would not qualify for rebates if the trade agreement isn’t renewed:
- Volkswagen ID.4 ($46,315),
- Chevrolet Bolt ($43,418),
- Chevy Equinox ($48,418),
- Ford Mustang Mach-E ($44,650)
- Nissan Leaf ($47,833), and
- Tesla Model Y ($49,990).
Other U.S.-made EVs are too expensive to qualify.
The federal government is relaunching its rebate program for electric vehicles. (Sean Kilpatrick / The Canadian Press files)
It’s important to note that eligibility is based on the final transaction price, not the starting MSRP as under the old program. So a $49,118 Toyota bZ XLE qualifies, a $56,473 Toyota bZ XLE AWD does not.
What’s not clear is whether accessories or destination fees added to the price would push it over the cap and deny eligibility.
Other vehicles that will qualify, thanks to free trade agreements between the country of origin and Canada include:
- Kia Niro ($39,560 PHEV and $48,610 EV),
- Kia EV4 ($42,160),
- Hyundai Kona EV ($46,964),
- Toyota Prius PHEV ($43,768),
- Toyota bZ ($49,118) and the
- Fiat 500e ($31,290).
Canada enjoys trade agreements with South Korea, Japan and the EU.
What would not be the least bit surprising would be to see some vehicles that are just over the $50K cap have their prices adjusted to qualify. A key example might be the Mitsubishi Outlander PHEV, which would need just a $1,477 haircut to qualify.
It may also cause Toyota Canada to either sharpen its pencil on the all-new 2026 RAV4 PHEV, depending on where the as-yet-unannounced price of that vehicle was to land, or build in Canada. The outgoing 2025 RAV4 PHEV price was $55,553.
Chinese EVs, which will be allowed into Canada on a limited basis soon, will not qualify, however analysts such as AutoForecast Solutions vice-president Sam Fiorani suggest China is knocking on the door to build cars in Canada, which would then allow those vehicles to qualify.
Part of the government’s plan is to devote $3 billion to supporting investments in Canadian automotive manufacturing, so existing manufacturers (Toyota, Honda, GM, Ford, Stellantis) can get help to retool or expand existing plants and newcomers, possibly from South Korea or China, can also get support.
The exemption for Canadian-made EVs, combined with a renewed Canada-U.S.-Mexico trade deal, would put a bit of pressure on, for example, Honda, which paused its EV plans for Alliston, Ont., during the trade dispute and let Volkswagen, which has forged ahead with its construction of a battery plant in St. Thomas, Ont., regardless, breathe a bit easier.
Global Automakers of Canada, long a critic of the tough EV mandates laid out by former prime minister Justin Trudeau, welcomed the announcement, particularly the government’s commitment of $1.5 billion to build out charging infrastructure.
“These are issues for which we have long sought direction from government and should give Canadians more choice, improve affordability and make electrified vehicles more accessible,” GAC president David Adams said in a news release, who cautioned he’s awaiting complete details before rendering a final verdict.
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