Canada Electric Vehicle Industry Insights: Q2 2025

• Zero-emission vehicles (ZEVs) account for approximately one in 11 new vehicles registered in Canada. ZEV market share was 9.2% for Q2 2025, down from 9.7% quarter-over-quarter.
• ZEV volume increased 25.6%, while total light-duty vehicles (gross vehicle weight (GVW) =< 8,500 lbs.*) volume increased by 32.3%.
• The market share for battery electric vehicles (BEVs) decreased to 5.9%, with volume increasing by 13.3%.
• Quebec has the highest EV adoption rate of all provinces with ZEVs accounting for 11.8%.
• Quebec leads in overall ZEV volume in Canada, accounting for 45.9%.

Executive summary: Q2 2025 Canadian market insights GVW <= 8500 lbs.*

Hybrids eclipse ZEVs in consumer preference: The Canadian market has reached a pivotal inflection point. For the first time, full hybrids (12.9% market share) have surpassed the entire ZEV segment (9.2%), signaling a major shift in consumer priorities toward practicality and affordability.

ZEV growth decelerates, revealing a fractured market: While ZEV sales volume continues to grow, their market share has contracted from 9.7% to 9.2% quarter-over-quarter. This national trend masks a deep provincial divide: Quebec remains a BEV stronghold, while the rest of Canada, including the major markets of British Columbia and Ontario, has overwhelmingly embraced hybrids.

Consumer pragmatism and economic factors are key drivers: The surge in hybrids is driven by mainstream consumer concerns regarding BEV affordability in a high interest rate environment, charging infrastructure gaps and range anxiety. With federal and provincial ZEV incentives ended or reduced, along with the 100% tariff on Chinese BEVs, hybrids are emerging as the preferred transitional technology for the risk-averse majority.

Significant implications for federal ZEV mandates: The current market trajectory, with consumers favoring non-ZEV hybrids, creates a substantial gap between market reality and the federal government’s ambitious ZEV sales targets. This disconnect poses a strategic challenge for automakers and policymakers alike.

The Canadian EV industry is at a pivotal inflection point. For the first time, full hybrids (12.9% market share) surpassed the entire ZEV segment (9.2%), signaling a consumer preference shift toward affordability and practicality.

• Q1 2025 ZEV Registrations: 9.7%

• Q2 2025 ZEV Registrations: 9.2%

Despite a 25.6% increase in ZEV volume, the overall market expanded faster (+32.3%), diluting ZEV market share. This has resulted in a realignment of consumer powertrain preferences:

• Full hybrids (12.9%) are now the undisputed leader.

• BEVs (5.9%) are losing momentum despite volume growth.

• Mild hybrids (4.2%) have overtaken PHEVs.

• PHEVs (3.3%) remain the smallest segment.

Consumer pragmatism dominates the Q2 2025 landscape. Factors such as high interest rates, BEV affordability challenges, limited charging infrastructure, and range anxiety are driving Canadians toward hybrids.

Additional pressures include:

• The reduction or elimination of federal and provincial ZEV incentives.

• A 100% tariff on Chinese BEVs, further constraining affordability and supply.

• A fractured provincial market, where Quebec remains a BEV stronghold, but Ontario, British Columbia, and Alberta are increasingly hybrid-first markets.

The growing dominance of hybrids presents a strategic challenge to Canada’s ZEV mandate. Because full hybrids are not classified as ZEVs, their popularity creates a widening gap between current adoption patterns and the federal government’s 2035 ZEV targets.

• Quebec: Still leads in ZEV adoption, with BEVs maintaining a strong foothold (11.8%).

• British Columbia: Once a ZEV leader, it has now shifted toward hybrids, with full hybrids (16.9%) overtaking BEVs (9.9%).

• Ontario: The largest market for hybrids, with full hybrids at 14.6% and mild hybrids at 5.2%.

• Alberta & Prairies: Hybrid-dominant, with BEVs lagging far behind (e.g., Alberta full hybrids 12.3% vs. BEVs 1.8%).

This divergence underscores the importance of aligning policies not only nationally but also regionally, given the starkly different adoption patterns across provinces.

Q2 2025 data confirms a significant turning point: hybrids have overtaken ZEVs in consumer preference. While ZEV sales volumes are still climbing, their market share continues to erode relative to full hybrids.

This signals both opportunity and challenge:

• Automakers must adapt strategies to address hybrid-driven consumer demand while still meeting ZEV mandates.

• Policymakers face the urgent need to revisit incentive frameworks and infrastructure development to close the gap between policy goals and consumer realities.

Canada’s electrification journey remains on track, but its trajectory is being reshaped by hybrid technology as the bridge toward long-term ZEV adoption.

*Transport Canada definition of light-duty passenger vehicles with the iZEV program.