There is a new federal electric vehicle incentive, but while the amount is the same as its predecessor program for now, there are a number of differences, particularly regarding which models qualify.
Canada’s Electric Vehicle Affordability Program (EVAP) offers a maximum discount of $5,000 on fully electric vehicles (EVs) and $2,500 for plug-in hybrid electric vehicles (PHEVs). However, on Jan. 1, 2027, the maximum discount will drop to $4,000 and $2,000 respectively, and continue to drop in future years.
The key difference from the previous program relates to what qualifies. Under the earlier plan, only the base trim had to cost less than $55,000 (or $60,000 for trucks and SUVs) in order for higher-end, pricier trims to qualify. Now, the number that determines if a car qualifies is the final transaction value, meaning some trims of a vehicle will qualify while others won’t.
Here’s everything car shoppers need to know about EVAP:
When was the incentive launched and why?
The EV incentive was announced in February as part of Prime Minister Mark Carney’s auto strategy and is applicable to new EVs and PHEVs bought or leased as of Feb. 16. When it was announced, there were few details, but more than a full month in, there’s a more complete picture.
The $5,000 discount is intended to “strengthen domestic demand by making EVs more affordable,” according to a statement from the Prime Minister’s Office. It’s part of a series of federal policies aimed at bolstering domestic EV production, reducing emissions and spurring the development of more charging infrastructure.
EVAP effectively replaces the Incentives for Zero-Emissions Vehicles (iZEV) program that ran from 2019 until it suddenly ran out of money in March 2025. The new program has a budget of $2.275-billion, which is meant to last five years.
How much is the incentive?
In 2026, consumers and businesses can get up to $5,000 off the purchase or lease of a new EV, or up to $2,500 for a PHEV. But it’s important to know the incentive amounts will begin to decline starting next year.
Here’s the EVAP timeline:
Dealerships apply for the incentive on behalf of consumers. As the program guidelines state, buyers “should not have to pay a deposit to get the incentive and the incentive should not be reimbursed in the form of a cheque at a later date. The incentive should be applied right away when you buy or lease the vehicle.”
Individuals can only receive one EVAP payment during the five-year program, so choose how – and when – you use it. (There are different limits for businesses and not-for-profits, details of which can be found on the program’s official Q&A page.)
How does EVAP work for leases?
Leases of 48 months or more will be eligible for the full discount of up to $5,000 in 2026. Shorter lease terms are still eligible, but the amount ratchets down:
- 36 month lease = $3,750 (off a qualifying EV)
- 24 month lease = $2,500
- 12 month lease = $1,250
Which vehicles are eligible?
The discount only applies to new vehicles with a “final transaction value” of up to $50,000, unless that vehicle was made in Canada, in which case there is no price cap. That’s why, for example, you’ll find the made-in-Windsor Dodge Charger Daytona Scat Pack – a 550-horsepower, $75,390 sport sedan – is eligible alongside more practical and lower-priced vehicles.
Chinese-made EVs aren’t eligible because incentives only apply to vehicles made in countries that have a free-trade agreement with Canada.
The complete list of eligible vehicles can be found on the official EVAP Vehicle List, but eligibility for a particular purchase will be assessed at the time of sale. Vehicle prices can fluctuate and dealers can be creative with their own incentives, so a vehicle that qualifies this month might not next month, and vice versa.
What’s included in ‘final transaction value‘?
Here’s the full list, straight from the feds, outlining what’s included in the “final transaction value” calculation:
- the base price of the vehicle trim (inclusive of incentives or discounts offered by vehicle manufacturers or dealerships)
- optional features, add-ons and packages added during final assembly
- accessories included at delivery
- manufacturer or dealership fees related to the sale (dealership fee, service fee, administrative fee, documentation fee, market adjustment fee)
“Final transaction value” doesn’t include trade-ins or some common costs such as taxes, winter tires, EV chargers, extended warranties, government incentives and fees or pre-delivery inspection (PDI) and freight charges.
In Ontario, Alberta and some other provinces, however, dealers are required to advertise an “all-in” price that includes freight and PDI. So you might see a vehicle – for example, the 2026 Toyota RAV4 SE PHEV – advertised at $51,872 in Ontario, which is more than the $50,000 threshold, but it still qualifies once you subtract freight and PDI.
Have car companies changed pricing to help vehicles qualify?
In short, yes. Several car companies added their own incentives to discount their vehicles in order to get them under the $50,000 threshold.
For example, a spokesperson for Kia Canada confirmed the manufacturer added its own discounts to the 2026 Niro EV and 2025 Sorento PHEV so they would qualify. As of mid-April, Kia is offering a $5,000 discount on the top-trim Niro EV Wave – regularly $53,595 – which means it qualifies for an additional $5,000 EVAP discount, for a total of $10,000 off.
Similarly, Toyota is advertising discounts of $5,000 on the 2026 bZ EV and Prius PHEV in addition to EVAP. Toyota also dropped the price of its popular Rav4 PHEV by nearly $4,000 in order to get the base model to less than $50,000.
When Mitsubishi first announced the price in January of its updated 2026 Outlander PHEV – now with a larger battery and more EV range – it was $50,498. In February, Mitsubishi dropped the price of the base trim by $500 so that it qualifies. The other trims still don’t.
General Motors Canada also brought down the prices of some EV models, but a spokesperson for the company wouldn’t go into details.
“We are not being more specific because [manufacturer] incentives are reviewed and adjusted for market conditions on a regular basis,” Erin Strulovitch, a spokesperson for Chevrolet, wrote in an e-mail.
In other words, things can change fast, so be sure to confirm with a dealership whether or not a vehicle is eligible for EVAP.
