Dealers call for ZEV mandate reset as vehicle costs rise and financing gaps widen
CADA proposes hybrid inclusion, tax reform, and national EV policy alignment
Economic pressures and supply chain issues slowing consumer EV adoption across Canada.
The Canadian Automobile Dealers Association (CADA) has called on Ottawa to suspend and rework the country’s Zero-Emission Vehicle (ZEV) sales mandate, citing affordability challenges, infrastructure gaps, and growing market disconnect as barriers to adoption.
In testimony before Parliament and public statements this week, the association said the existing ZEV framework does not reflect current economic conditions or the purchasing power of most Canadians. Representing over 3,400 franchised vehicle retailers, CADA flagged rising vehicle costs and constrained supply chains as major challenges to meeting federal sales targets.
According to the group, dealers have invested significantly in the transition to electric vehicles, but high financing costs are now deterring buyers. National data referenced by CADA shows that while two-thirds of Canadians expect monthly vehicle payments to remain below $500, actual averages have surpassed $770 for leases and $880 for loans.
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Tim Reuss, President of CADA, told the committee that external pressures such as new U.S. tariffs are expected to raise vehicle prices further, making it harder for Canadians to access EVs under the current mandate timeline.
CADA highlighted differences in EV uptake between urban and rural regions as evidence of uneven readiness across the country. While larger cities benefit from more robust charging networks, rural areas face limited access to infrastructure, prolonging dependence on internal combustion vehicles.
Charles Bernard, Chief Economist at CADA, said current federal targets do not account for regional disparities or household financial stress. “Canadians are under growing financial pressure, and policy has to align with what consumers can actually afford,” he said.
The group also expressed concern that the ZEV mandate could weaken the competitiveness of Canadian auto retail, particularly if pricing and infrastructure issues are not addressed in the near term.
CADA offered a series of recommendations to reset the federal approach. Chief among them is a call to pause the mandate pending the outcome of ongoing North American trade negotiations under the Canada-United States-Mexico Agreement (CUSMA), which could influence EV supply chains and pricing.
Other proposals include excluding electric and hybrid vehicles from the federal luxury tax, ensuring companies without manufacturing or dealer operations in Canada cannot profit from surplus EV credit sales, and harmonizing federal policies with those of British Columbia and Quebec to avoid fragmented regional approaches.
The association said it supports Canada’s transition to electrification but emphasized the need for a revised approach that reflects real-time market conditions and consumer affordability. CADA confirmed its intent to continue working with government and industry stakeholders to develop a more adaptable policy framework.
