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Policy Drives Widening Canada-US Divergence in Zero-Emission Vehicle Sales, BMO Says

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The widening gap in zero-emission vehicle (ZEV) demand between Canada and the US highlights the growing role of government policy, rather than fuel prices alone, in driving electric vehicle sales in North America, according to BMO Capital Markets in a note.

Canada's ZEV rebound accelerated in June, with sales jumping 56% annually, which is the strongest increase since December 2024, before the previous federal rebates ran out of funding, said the bank.

"That marks a sharp acceleration from May and further underscores consumers' sensitivity to incentives and affordability," wrote BMO Senior Economist Erik Johnson in Thursday's note.

July could bring another strong reading, with demand for imported electric vehicles showing signs of a pickup, added the bank. As of last Friday, 12,813 Chinese-made vehicles had been imported into Canada.

The US market is moving in the opposite direction, said BMO. After stabilizing somewhat in May and June, US ZEV sales fell 36% on the year in July, as the loss of IRA incentives continued to weigh on demand.

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