Forced adoption of electric vehicles will be very costly for all Canadians, according to the MEI

• It is estimated the average electric car will still cost $6,720 more than the average car in 2026

Montreal, February 25, 2025 – The federal government’s decision to ban the purchase of gasoline-powered vehicles by 2035 will be very expensive for Canadian households and for governments, asserts an Economic Note published by the MEI this morning.

“By forcing the adoption of electric vehicles, the federal government is failing to take into account consumers’ willingness and ability to pay,” said Gabriel Giguère, senior public policy analyst at the MEI and author of the publication. “Both individuals and governments have a limited ability to pay, and elected officials need to take this into consideration.”

In 2023, the federal government introduced targets for gradually eliminating the sale of new gas-powered vehicles by 2035.

Despite multiple subsidies from various levels of government, electric vehicles accounted for just 13.4% of new registrations in Canada in the first three quarters of 2024.

According to a recent IEDM-Ipsos survey, among Canadians who do not already own an electric vehicle, less than a quarter said that their next car would be electric. The high purchase price was the most common objection, cited by 7 out of 10 respondents.

It is estimated that in 2026, the average electric car will still cost $6720 more to buy than its conventionally-powered equivalent. For SUVs, minivans and trucks, the premium will be closer to $11,500, and these differences are likely to persist.

“Not everyone can afford to pay a few thousand dollars more for a vehicle,” says Giguère. “And although the technology is improving, projections indicate that this premium for electric propulsion is not going away any time soon.”

Another factor that worries the author is the capacity of the electrical infrastructure required to serve all these new vehicles.

According to a report by the Canadian Ministry of Natural Resources, Canada would need to install 40,000 new public charging stations per year to support all these new vehicles. The researcher points out that, as of 2024, only 17% of this target had been met.

It is estimated that between now and 2040 the electrical production, transmission and distribution infrastructure necessary for this forced transition to electric vehicles will require expenditures of up to $294 billion.

“Not only is it likely to be expensive, but it’s also clear that our infrastructure is not ready to cope with the demand for electricity resulting from this forced adoption,” notes Mr. Giguère. “Instead of imposing their vision, our elected officials should listen a little more closely to the Canadian families telling them that this is an unrealistic plan.”

Two out of three Canadians consider it “unrealistic” to ban the sale of new gas-powered vehicles by 2035.

The MEI’s Economic Note is available here.

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The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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