Canada’s zero-emission vehicle rebate is gone.

So now what?

According to Canadian Black Book’s latest report, The Future of Electric Vehicles in Canada: Market Dynamics After the iZEV Rebate, the market for electric vehicles has taken a step back — but is now more ready to move forward into the future.

In the report, CBB analysts said the phaseout of the federal Incentive for Zero-Emission Vehicles program in January “represents a turning point” for EVs in Canada.

In the short term, it has created a temporary market setback for much of 2025, with an effective price increase of 8-12% for entry-level EVs lowering demand from cost-conscious car shoppers. But the report noted there is now a firm foundation in place for “the broader transition toward electrification,” with battery production costs dropping, infrastructure availability rising and consumer confidence in new and used EVs growing.

“The market is now shifting from a policy-driven growth plan to a performance-driven one — a sign of maturity rather than fragility,” CBB analysts said in the report. “Success in this next phase will depend on collaboration across our market’s manufacturers, financial institutions and policymakers to continue improving affordability, strengthening residual values and ensuring a seamless ownership experience.”

The iZEV program, implemented in 2019, provided a financial boost of some $2.6 billion for more than 560,000 ZEV sales through 2024, which CBB said raised the segment’s market share from 3% to more than 15%. The report called the program “a primary driver of adoption” for EVs, helping spark consumer education and charging infrastructure as well as building a source of affordable used EV inventory for the future.

In the absence of the federal program, provincial rebates remain in place in Quebec, British Columbia and several Atlantic provinces, and manufacturers have added various incentives to fill the gap.

Canadian Black Book studied 27 electric models and found 48% of them were still offering a cash incentive in October, with 90% of the mainstream models offering an average of $5,000 toward a cash purchase. The report noted the wide range of OEM incentives, which reach as high as $21,000, “highlights growing financial strain for manufacturers competing in a declining market.”

CBB’s research found “measurable effects” on residual values as a result of those programs and the end of the federal rebate. If new EV prices rise post-rebate, the report said, the relative value of used EVs could also increase, narrowing the price gap for the used market, and if demand shrinks, residuals could fall due to slower turnover and reduced lease demand.

Canadian Black Book’s analysts expect a “higher share of premium EVs will lower average retention rates, pushing residual values down over the next 12–24 months. Meanwhile, mainstream pre-2025 EVs already on the market will become more desirable amid higher prices, supporting stronger mid- to long-term residuals.”

With federal incentives gone, the report said, the responsibility for driving Canada to its EV goals falls squarely on manufacturers “to push EV models to be the vehicles Canadians want to purchase, decreasing their financial burden on the broader brand lineup over time and deepening the effort behind educating consumers to understand that historically large obstacles are falling down quarter by quarter.”

CBB noted that effort is already in progress, and as a result, “the opportunity for long-term values to sustain and improve is great.”

The full report is available here.