As the price to own a car in Canada climbs, there’s a growing disconnect among Canadians between what they expect to pay and reality.
Posthaste: Canada's EV incentives return on Monday. Will Canadians bite?
Canada’s electric-vehicle market is idling at a crossroads as a series of sector-altering events collide that could reignite the interest of Canadians, says Clutch Co.
“A year ago, the Canadian EV market was defined by subsidies, mandates and Tesla Inc. ‘s dominance,” the online used automobile seller said in a report on Thursday. “All three have shifted dramatically.”
A federal subsidy program for EVs restarts on Monday and will pay up to $5,000 per new EV with a value of no more than $50,000. Chinese-made EVs, which could start arriving in Canada this year after Ottawa struck a deal with Beijing, will not be eligible for the subsidy.
“What replaced (the mandates and Tesla’s dominance) is a market that behaves like a market (as) prices respond to supply and demand,” Clutch said.
Sales at Tesla, often used as a synonym for Canada’s EV market, dropped 65.3 per cent in 2025 from 2024. In 2022, Tesla commanded 40 per cent of the Canadian EV market, but that dropped to single digits by mid-2025, as General Motors Co. became the No. 1 seller of EVs.
Clutch said Canadians interested in the EV market will be seeing a flood of 35 new models in 2026, including the return of the Chevrolet Bolt with a base price of $39,999.
“This sets the domestic price floor and undercuts most Chinese imports that won’t qualify for the incentive,” Clutch said.
Kia Corp., Hyundai Motor Co., Subaru Corp. and Toyota Motor Corp. are also launching new models in the mid-$40,000-to-$55,000 range, adding to the flood of options for buyers.
Clutch said the domestic new EV market will have room to run since the arrival of Chinese EVs will be slowed down by rules around regulatory compliance.
Chinese automaker BYD Co. Ltd. , which has models ready to go, is currently capped at sending 2,500 vehicles to Canada until it satisfies a Transport Canada pre-clearance program. BYD also needs to establish a distribution network and a way to provide service and warranties.
Other Chinese EV manufacturers, including Nio Ltd. and Guangzhou Xiaopeng Motors Technology Co. Ltd. (Xpeng), are currently locked out until a clearance application pause is lifted by Transport Canada.
“Mass Chinese volume is a 2027 story at the earliest,” Clutch said.
But it said it’s not quite all clear for the EV market.
Car loans are expensive, with interest rates of 6.5 per cent to seven per cent for new vehicles and nearly eight per cent for used ones.
EVs are typically more expensive than their gas-powered counterparts, leaving monthly payments “unworkable” for many buyers without a rebate program to buttress the cost, Clutch said.
It also said “rate-sensitive” Canadians are turning to hybrid EVs since they are cheaper than full-on EVs and solve battery-range anxiety and charging problems. Hybrids also deal better with cold weather.
A report on global consumer automotive trends by Deloitte Touche Tohmatsu Ltd. found that driving range, cost and performance in cold weather ranked as Canadians’ top three concerns when considering purchasing an EV.
Clutch said hybrids accounted for 16.9 per cent of new light-duty vehicles in the third quarter of 2025, based on data from S&P Global Inc.
Deloitte’s survey indicated that Canadians favoured gasoline and hybrid vehicles by 56 per cent and 22 per cent, respectively, over EVs at 11 per cent for their next vehicle purchase. In 2025, 51 per cent favoured a gas engine.
Meanwhile, it’s crunch time for used EVs.
Cars leased in late 2024 to take advantage of the previous federal rebate program and EVs coming off three- and four-year leases are flooding the used market, so they are sitting in lots longer and dealers are continuing to drop prices to get sales moving.
Trade-in values on leases are also falling, meaning new sales are “constrained,” Clutch said.
As for used Teslas, their prices have declined four times faster than those for other EVs and no longer command a $5,000 premium.
“Policy and product don’t exist in a vacuum,” Clutch said. “The broader economic environment is shaping buyer behaviour in ways that compound the challenges already facing the EV market.”
TFSA vs. RRSP: A wealth-building series from the Financial Post
It’s one of the most important — and sometimes confusing — savings decisions Canadians face, and the right answer depends on far more than a simple rule of thumb. The Financial Post series called TFSA vs. RRSP breaks down the key questions in deciding between the two accounts, including mistakes to avoid and how to get the most bang for your buck. Read the series here.
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More than 80 per cent of Canadians expect to pay less than $750 per month for a car payment, while 32 per cent expect to pay less than $250, according to a recent survey from Deloitte Touche Tohmatsu Ltd.
Yet according to data from J.D. Power and Associates, the average new car payment is nearly $900 per month, while the average used car payment exceeds $760 monthly.
— Ben Cousins, Financial Post
Read the full story here.
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A lack of understanding of the tax reporting of GIC income accrued, but not paid, got a taxpayer into hot water with the Canada Revenue Agency (CRA) for the 2022 taxation year. The taxpayer’s troubles began when he ignored a February 2022 CRA instalment reminder, informing him that if his tax owing for the 2022 taxation year was going to be more than $3,000, he may be required to pay income tax by instalments . Tax expert Jamie Golombek explains the case here .
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McLister on mortgages
Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.
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Today’s Posthaste was written by Gigi Suhanic with additional reporting from Financial Post staff and Bloomberg.
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