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Gas-powered vehicle sales have peaked in Canada

More Canadians are making the switch to EVs, spelling the decline of the internal combustion engine (ICE)

What’s new?

Reducing emissions from the transportation sector is critical to meeting Canada’s climate targets. Transportation is the second largest source of carbon emissions in Canada, with over half of those coming from passenger vehicles. Addressing these emissions will require Canadians to swap their gas cars with electric vehicles (EVs), while also using more transit and active transportation.

The good news is that EV sales are on the rise in Canada — and globally — while sales of gas-powered cars have peaked.

The rise of EVs amidst declining ICE sales in Canada

Every year, EVs are increasingly taking up a larger share of total vehicle sales in Canada (Figure 1). Six years ago, EVs represented just one per cent of annual sales. Now, they comprise over 10 per cent of new vehicle sales.

EV sales grew at a staggering annual rate of 46 per cent, increasing over eightfold between 2017 and 2023. In fact, EV sales in the first three quarters of 2023 have already surpassed sales for all of 2022.

British Columbia and Quebec have the highest rates of EV sales to date, reaching 20 per cent and 17 per cent of total vehicle sales, respectively last year. The success of EV penetration in these provinces can be attributed in part to stringent policies such as their own ZEV mandates.

These trends in EV sales run in contrast to sales for gas-powered cars, where they have been declining by an annual average rate of 6.3 per cent since their peak in 2017 (Figure 2). 

Getting more Canadians behind the wheel of an EV

There are a lot of reasons why more Canadians are getting behind the wheel of an EV. The lifetime costs of EVs are lower than their gas-powered alternatives. As more big automakers join the global EV race, consumers are getting to choose from a wider selection of more affordable models. And EV drivers report a more enjoyable driving experience compared to conventional gas vehicles. 

With these growing benefits and as the demand for EVs continues to increase, Canada’s regulated sales target of 100 per cent zero-emission vehicle sales by 2035 serves as a strong foundation for guaranteeing the supply of EVs for Canadians. On top of that, a national mandate is critical to ensuring Canada is aligned competitively with peers. Currently, 20 jurisdictions around the world —including major car markets such as in California and the European Union—have also implemented their own mandates.. 

But achieving Canada’s regulated sales target will require continued effort on the part of governments and the private sector to overcome barriers to greater EV adoption. Complementing the availability and supply of EVs should also be a suite of government policies and private sector support aimed to bolster the mandate by accelerating EV demand. This includes reducing upfront costs through purchase incentives, and continuing to address concerns of range anxiety and access to charging by expanding Canada’s EV charging infrastructure network.

Arthur Zhang is a Research Associate at the Canadian Climate Institute.