Gas prices and new incentives sparking more EV sales

Gas prices and new incentives sparking more EV sales

EV sales are up 20.8 per cent in the first four months of 2026 compared to last year

After months of sluggish sales, electric vehicles are getting a boost from high gas prices and renewed government incentives.

EV sales have climbed since January, when the Liberal government restored incentives, and just before the U.S. and Israel launched strikes on Iran, sparking a Middle East war that sent gas prices soaring.

According to Statistics Canada data, Canadians bought 8,672 new EVs in January. That rose to 12,547 in February and 21,574 in March, before dipping down to 17,795 in April.

Taken together, EV sales in the first four months of 2026 were up 20.8 per cent compared to the same period in 2025.

More Canadian car shoppers are also considering an EV. An annual J.D. Power survey of new-car shoppers found that 34 per cent of respondents were somewhat or very likely to buy an EV as their next vehicle — up from 28 per cent the year before.

Industry analysts say affordability is driving the renewed interest, as gas prices remain high and EV incentives return.

"I think for the most part, Canadians were just … simply doing the math," said J.D. Ney, managing director for J.D. Power Canada.

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The rebound follows a year of sluggish EV sales.

In 2024, when the federal government's first EV incentive program was in place, Canadians routinely bought more than 20,000 EVs a month. But after the incentives were cancelled, monthly sales dropped.

Charles Bernard, chief economist for the Canadian Automobile Dealers Association, said sales never cratered, but they were certainly lower than the year before. At the same time, some EV infrastructure projects in Canada were put on hold, like Honda's $15-billion electric vehicle complex which was suspended indefinitely last month.

"In a world where everything is more expensive … it was tough for consumers to say, 'Yeah, I'll pay a premium because I love that [EV] technology'," Bernard said.

The government reintroduced incentives in February, offering up to $5,000 off the price of a fully electric vehicle and up to $2,500 off a hybrid, as long as the vehicles are made in Canada or in a country with which Canada has a free trade agreement.

Bernard says those incentives have made EV prices more comparable to those of gas-powered vehicles, drawing more consumers back in recent months.

Customers calling Shift Electric Vehicles, a used-EV dealership in Burlington, Ont., have been quick to mention the rising cost of gas, said sales manager Max Maurice.

"People come in, you know, claiming … gas prices as the reason why they're trying to get out of their big Dodge Ram diesel truck that costs them a thousand bucks a month on gas," Maurice said.

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While the Statistics Canada data captures only new EV sales, Maurice said he has also fielded many more calls in recent months.

Fuel costs jumped after the U.S. and Israel launched strikes on Iran in late February, restricting tanker traffic through the Strait of Hormuz. Canadian pump prices have eased from recent highs, but the national average was still $1.63 a litre as of Friday afternoon — 24.1 cents higher than last year's average, according to fuel-tracking site GasBuddy.com.

Maurice said some interest in EVs could wane if gas prices fell again, as partly happened in 2022 when prices dropped after reaching an all-time high. But he said some shoppers still wanted to switch to EVs to avoid future price shocks.

"Although the gas prices were low, they said, 'I don't want to go through this again'," Maurice said. "It was kind of to future-proof their wallet, if you will, because now they're not paying the high gas prices of today."

Canadians interested in low-cost Chinese EVs

Cost could also lead some buyers to consider Chinese EV brands, if and when they enter Canada, Ney said.

Nearly a third of all new car shoppers surveyed by J.D. Power said they would consider a Chinese brand, which generally come with a lower sticker price. That figure rose to more than half among shoppers interested in buying an EV as their next vehicle.

"The expected … low price point is by far the biggest driver of that interest," Ney said.

Canada's auto market is officially open to Chinese EVs, but you won't see cheaper models right away

While the federal government will now allow 49,000 Chinese EVs into Canada annually at a reduced tariff rate, regulatory and strategic issues could still slow brands such as BYD or Chery from entering the market.

The 2,910 EVs from China that arrived in May appear to have been mostly Teslas, according to Prime Minister Mark Carney.

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Still, with low-cost models, high fuel prices and incentives all making EVs more attractive, Ney said price has become less of a concern, removing one major obstacle for car shoppers.

"There are some real … barriers to EV adoption at the moment that do need to be sorted out. But I think we're certainly on a better path than we were, say, 12 months ago," Ney said.

Range anxiety, a lack of charging infrastructure and poor performance in cold weather remain concerns noted by some shoppers, but cost has dropped from the list of top worries, he said.

For Chinese automakers, markets like Canada are more important than ever

With the situation in the Middle East still unresolved, Bernard said the economic factors making EVs more attractive are likely to persist, keeping sales elevated.

But anyone expecting a massive boom could be disappointed. Bernard noted that overall vehicle sales have dipped slightly year over year — so while EVs may account for a larger share of new vehicles sold, the monthly totals may not look as dramatic.

Abby Hughes is a writer with CBC News based in Toronto. Originally from Orillia, Ont., she studied journalism at Toronto Metropolitan University. She covers news from the worlds of business, entertainment, health, science and education, and her favourite stories focus on the real people in those areas — the customers, fans, patients, citizens and students. You can reach her with story ideas at abby.hughes@cbc.ca.