Is the Canadian EV Market Collapsing—and What Does That Mean for the Future of the EV Industrial Sector in Canada?

Why did Honda pause its $15 billion EV investment in Ontario—and why does it matter?

Honda’s decision to delay the development of four EV manufacturing hubs in Ontario is more than a corporate course correction—it’s a jarring signal to Canada’s entire automotive sector.

This project was envisioned as the foundation of the country’s first full-scale EV supply chain and was expected to create over a thousand jobs by 2028. Its suspension raises questions about the confidence global manufacturers have in Canada's EV landscape.

While Premier Doug Ford insists Honda remains committed, the delay reflects growing uncertainty in the sector—uncertainty that could deter future investments if left unaddressed.

What’s driving the sudden collapse in Canadian EV demand?

The numbers are stark. In 2022, 68% of Canadians expressed interest in purchasing an EV. By 2024, that interest has plummeted to 42%. Even more alarming, EV sales dropped from 20% of new vehicles at the end of last year to just 7.5% this spring. This dramatic drop is due to a perfect storm of government policy reversals, economic anxiety, and infrastructure limitations. Incentive programs that made EVs financially accessible were pulled with little warning—federally and in key provinces like Quebec and British Columbia. At the same time, Canadians are grappling with affordability issues, inflation, and a lack of trust in the current state of EV infrastructure, especially charging networks.

Did government policies unintentionally sabotage consumer adoption?

Yes—and the impact has been swift. The abrupt withdrawal of the federal EV purchase incentive ($5,000 per vehicle) in early 2024 blindsided both manufacturers and buyers. Quebec’s temporary removal of its rebate and BC’s announcement to wind theirs down further compounded the issue. For a consumer market still in transition, these incentives were more than perks—they were lifelines. Removing them without an alternative strategy essentially pulled the rug out from under the industry just as it was gaining traction. Policy inconsistency is proving to be one of the most dangerous threats to the EV rollout.

What role does infrastructure—or the lack thereof—play in this crisis?

Infrastructure continues to lag far behind consumer needs and government targets. While EV production and availability have scaled up, the pace of charging station deployment has not kept up. In a country where long distances and cold climates are everyday realities, range anxiety remains a top barrier. Without reliable, accessible, and fast-charging infrastructure across both urban and rural areas, mass adoption will remain a dream deferred. Consumers aren't just hesitant—they’re unconvinced the system is ready for them.

Are Canadian auto jobs at risk due to the EV slowdown?

Absolutely. Approximately 128,000 Canadians work directly in the automotive sector, with hundreds of thousands more connected through supply chains and adjacent industries. The slowdown in EV investment and production directly threatens these jobs. While the industry is still largely anchored in internal combustion engine manufacturing, the long-term transition to EVs is inevitable. If Canada doesn’t maintain momentum in attracting EV projects, there’s a real risk that jobs—and economic benefits—will be lost to other countries, particularly the United States.

Are trade tariffs and US protectionism compounding Canada’s EV troubles?

They are. US-imposed tariffs and shifting trade policies are creating enormous uncertainty for automakers operating across North America. Companies face billions in potential exposure, and some are already considering how to reduce their vulnerability by shifting production to the US. While Canada has long been a stable investment destination and part of an integrated supply chain with the US, the current protectionist tilt in Washington—alongside promises to bring more manufacturing “home”—threatens that balance. Without clear strategies to mitigate tariff pressures, Canada risks losing its competitive edge.

Can Canada still compete in the global EV race?

Yes, but only if it acts quickly and decisively. Canada possesses unique strategic advantages: it's the only jurisdiction in the world with all the raw materials necessary for next-generation EV batteries, it has a highly skilled workforce, and it benefits from political and economic stability. But these strengths must be matched by coherent, forward-looking policy. That means reinstating and stabilizing incentives, accelerating infrastructure investments, negotiating better trade terms, and creating realistic, flexible EV adoption targets that align with current market conditions.

Is the federal EV mandate setting the industry up to fail?

Possibly. The federal government has mandated that 20% of new vehicle sales must be electric by next year. Given the current consumer demand and infrastructure gap, there is no viable path to hitting that target. The goal of reaching 100% zero-emission vehicle sales by 2035 remains technically feasible, but without immediate support measures and realistic interim targets, these policies risk undermining rather than accelerating EV adoption. Mandates without market readiness only serve to widen the gap between ambition and reality.

So—is Canada’s EV future still possible, or already lost?

It’s not lost—but it’s on the brink. Honda’s decision is a warning, not a death sentence. Canada still has the resources, the talent, and the geopolitical position to be a major player in the global EV market. But if it doesn’t adjust course now—by reinstating incentives, solving infrastructure gaps, and negotiating better trade protections—the next wave of EV investment may pass it by. The opportunity is still here. The question is: will Canada seize it before it slips away?