Federal iZEV Rebate Program to Pause - Lack of Funds

On Friday, the 10th of January 2025 Transport Canada announced that the federal iZEV, Incentives for Zero Emissions Vehicles program would be nearing it's end by 31 March 2025 or sooner if funds were completely depleted. As of Friday, the fund had approximately $71.8 million in it's account which could have served at least 14,000 new fully electric vehicles, however just 3 days later on Monday the federal government put a complete pause on the program, citing the funds were now exhausted.

Here on PRN we're launching our new OverDrive Series, where we discuss news and trends in the automotive world outside of our typical weekly review format. This announcement lines up with this new show's mandate of covering breaking news in the industry. Until this past week, the iZEV program had been a huge success and integral part of Canada's electrification strategy. To date, over 546,000 vehicles had been granted using the federal program which covered both fully electric vehicles as well as plug-in hybrids with at least 49kms of average range.

We covered this program extensively on TestDrive, especially in our early days in Québec where provincial rebates could be added for around $13,000 in tax breaks on new electric vehicles. The province of Québec announced earlier in December 2024 that their program would be pausing in February before resuming later with a reduced rebate.

The iZEV program allowed Canadians to qualify for up to $5,000 off a new full zero emission vehicle, and up to $2,500 for a PHEV. Maximum price requirements meant not all vehicles could be eligible, usually excluding any of the luxury-class offerings, along with larger utility EVs like the Ford F-150 Lightning or Chevrolet Silverado EV. The intention was to help the average Canadian buy a new, affordable family electric vehicle and for the most part I'd say it worked.

With the program now going on pause until at least the 31st of March 2025, there is uncertainty for electric vehicle sales in the county. Some OEMs like Hyundai have announced that they will cover the $5,000 incentive the iZEV program offered, extending this to customers who purchased vehicles earlier in 2025 onward. Volkswagen Canada has also stated they will help out customers, however their date range is less than that of Hyundai.

While we here at PRN_TestDrive believe EV sales will hurt for a bit, it's by no means a final nail in the coffin for the electric car. When Ontario dropped their provincial rebate in 2019, sales of electrics dropped, but after 2 years sales not only reached their rebate-era levels, they started to surpass them in sales. We imagine the same will be true here, with a dip in sales now, but a resurgence down the road as more vehicles become available to more buyers.

Either MSRPs will adjust to reflect the loss of the tax credit, or manufacturers will have to start producing less expensive vehicles. Either way it's something we'll be following closely here at PRN. For more on the iZEV federal EV tax credit you can watch our episode of OverDrive on our YouTube Channel: