There are questions about the future of the electric vehicle market in Canada. They’ve been prompted by Honda Canada postponing a $15 billion Canadian project in Ontario for two years. Federal government rebates are no longer being offered to Canadians who purchase E-V’s. Sales of the vehicles appear to be falling as Canadian consumer interest wanes.
It was only just over a year ago that the electric vehicle market appeared rosy, with a bright future as Canadians began to move away from gasoline-powered vehicles. Premier Doug Ford and former Prime Minister Justin Trudeau were on hand to announce a $15 billion project from Honda.
“Today Honda is making Canadian automotive history. With this announcement, we will be investing to create Canada’s first comprehensive electric vehicle supply chain from start to finish,” Trudeau said.
The $15 billion project would include an EV assembly plant, two parts plants, and a stand-alone battery manufacturing facility. The Ontario and Canadian governments would pony up $2.5 billion each to help make it happen.
Then a week ago, with President Trump’s tariffs looming large on the automotive sector in Canada and sales of EVs slumping, Honda hit the pause button, for two years, sending Premier Ford scrambling.
“When I’ve talked to Honda, they’ve promised us they’re going to continue on with their expansion. They’re going to keep that facility moving forward. So, we’ll see how that moves forward. But we’re very confident that we’ll continue producing Honda vehicles here in Ontario,” Ford said.
That could be wishful thinking. Statistics Canada recently announced that sales of electric vehicles in Canada fell by 44% from April of last year to April of this year. The federal government no longer offers Canadians a $5,000 rebate to offset the purchase of an EV, and Ontario hasn’t offered any incentives since 2018.
Brian Kingston is president and CEO of the Canadian Vehicle Manufacturers Association. Kingston said Honda’s postponement is of concern.
“The fact is the EV market has slowed, and it has slowed quite markedly. And so, manufacturers have to respond to that,” Kingston said.
A recent survey by Auto Trader found that just 42% of Canadians show interest in electric vehicles – down from 68% in 2022.
“Even more striking is the share of EV sales in the Canadian market. At the end of last year, 20 percent of sales were zero-emission vehicles. Last month that dropped to 7.5 percent. So, the EV market is effectively collapsing at the moment in Canada,” Kingston said.
Kingston sees the elimination or lowering of government rebates, at a time when Canadians are facing tariff issues and higher prices, as a major factor. There is also concern about the charging infrastructure, which he says isn’t keeping pace.
When it comes to industry investment, uncertainty plays a part. Dimitry Anastakis of the Rotman School of Business said revolving tariffs from President Trump have put many industries into just that.
“Every day up and down, the tariff roller coaster goes, and that uncertainty means that if you’re a business leader you can’t make any real decisions around investment until you have some stability, security consistency going forward,” Anastakis said.
The renewed questions about the future of the EV market have many worried, especially among industry watchers to see how other large-scale EV projects in Canada, such as Stellantis and Volkswagen, will proceed. That’s put pressure on Canada’s newly appointed industry minister, Melanie Joly.
She said Honda has told her it’s fully committed to major electric vehicle investments in Canada, and she’s been in contact with the CEOs of GM, Ford, and Stellantis.
