Matthew Lau Calls for Complete Reversal of Costly EV Policies
As the Carney government walks back its controversial electric vehicle mandate that would have banned new gas-powered vehicle sales by 2035, Fraser Institute senior fellow Matthew Lau argues this represents only a partial victory for Canadian taxpayers and consumers.
The Subsidy Problem Persists
While the government has abandoned its most aggressive EV policy, it continues to push forward with substantial financial incentives that Lau contends fail basic economic scrutiny. The federal plan includes reinstating $5,000 rebates for qualifying electric vehicles priced under $50,000, alongside billions in subsidies directed toward automakers.
"This continued push for electric vehicles highlights a significant discrepancy between how individual Canadians want to spend their money and how the federal government thinks they ought to spend it," Lau observes, pointing to a fundamental disconnect between policy objectives and market realities.
Consumer Preferences Versus Government Direction
Recent Statistics Canada data reveals a telling trend: through the first eleven months of 2025, only 156,936 new zero-emission vehicles were sold nationwide. This represents a substantial 34.5 percent year-over-year decline. More significantly, EVs and plug-in hybrids accounted for just 8.6 percent of total vehicle sales during this period, compared to 13.8 percent throughout all of 2024.
"That the federal government wants to direct people's purchases, through taxes and subsidies, toward the types of cars they do not actually wish to purchase, is not a good sign," Lau emphasizes, questioning the wisdom of policies that contradict clear consumer behavior patterns.
Questionable Environmental Benefits at High Cost
Beyond market considerations, Lau challenges the environmental justification for ongoing EV subsidies. Multiple studies suggest these policies deliver questionable ecological benefits while imposing substantial taxpayer burdens.
A 2023 analysis revealed that government subsidies cost taxpayers between $355 and $857 per tonne of averted greenhouse gas emissions, depending on the province. These figures substantially exceed the federal government's own estimate of $294 per tonne in environmental harm caused by emissions in 2030.
"This suggests EV subsidies currently fail a cost-benefit test by a significant margin," Lau concludes, noting that as global EV adoption increases, environmental benefits may actually decline due to energy-intensive mineral extraction processes.
The Mineral Extraction Conundrum
Research from the Manhattan Institute and other organizations highlights growing concerns about the environmental impact of battery mineral production. As demand for cobalt, lithium, and nickel explodes worldwide, the energy consumed in mining and processing these materials could substantially offset emissions reductions from avoiding gasoline.
Mark P. Mills of the Manhattan Institute noted in a 2023 study that "those emissions substantially offset reductions from avoiding gasoline and, as the demand for battery minerals explodes, the net reductions will shrink, may vanish, and could even lead to a net increase in emissions."
Similarly, analysis published in The Atlantic suggests that electrifying larger vehicles like SUVs might actually increase emissions by diverting limited battery minerals away from smaller, more efficient electric cars.
A Call for Comprehensive Policy Reassessment
Lau acknowledges that the Carney government made the correct decision in reversing the EV mandate but argues this represents only half the necessary policy correction. "The evidence from Canada and around the world is clear," he states. "The government should not undo the benefits of this reversal by imposing other damaging policies."
The Fraser Institute analyst maintains that people who purchase government-favored vehicles should not receive special financial advantages at the expense of those who choose different vehicle types or opt out of car ownership entirely. With Canadian consumers demonstrating clear preferences through their purchasing decisions, Lau contends that market forces rather than government direction should determine the future of transportation in Canada.
