One of the most persistent criticisms of electric-vehicle policy is that EVs are a solution for people who can already afford them: middle- and higher-income households able to absorb a higher upfront vehicle price, install a charger at home and collect the savings that come from avoiding the gas pump. Canadians who have the most to gain from escaping gasoline dependence are often the ones least able to afford the ticket out.
There is some justice in that criticism. But it points to a problem with how we have designed EV policy, not with EVs themselves.
When gasoline prices spiked earlier this year, the impact was profoundly unequal. Lower-income households have less room in their budgets to absorb sudden increases in the cost of getting to work, taking children to school or simply buying groceries. For households in rural and suburban communities with few practical alternatives to driving, gasoline isn’t discretionary spending.
That creates an uncomfortable irony in Canada’s approach to EVs. We know electric vehicles can dramatically reduce household exposure to gasoline prices. But the households most vulnerable to those prices are often the least able to afford the upfront cost of making the switch.
Ottawa’s response to high fuel prices has focused on the pump. The federal government suspended the 10-cent-per-litre gasoline excise tax earlier this year and has now extended that holiday into 2027, before the tax is gradually restored.
Given the very real financial stress caused by extraordinary gasoline prices, providing temporary relief is defensible. But temporary is the operative word.
As I wrote in April, when you find yourself in a hole, the answer cannot simply be to make digging a little cheaper. Canada remains exposed to oil-price shocks largely beyond our control. Even as a major oil producer, Canadians buy gasoline at prices shaped by global markets and geopolitics.
A tax holiday can cushion the blow but it doesn’t eliminate the vulnerability.
Worse, broad-based fuel-tax relief is poorly targeted. Everyone buying gasoline receives the same reduction per litre, including higher-income households with larger vehicles and greater fuel consumption. Lower-income Canadians may be more vulnerable to high prices, but they do not necessarily receive the greatest dollar benefit from cutting the tax.
There is a better way to use some of those public dollars. For some households, the answer is better transit or alternatives to driving. But for millions of car-dependent Canadians, electrification offers the clearest route to permanently reducing exposure to volatile gasoline prices. The challenge is making it accessible and affordable.
Canada could learn from France, which has pioneered a targeted EV leasing model aimed at lower-income, car-dependent households. Rather than relying on a conventional purchase rebate, public support is used to bring down the monthly lease payment. Demand has been enormous: roughly 50,000 vehicles were taken up in each of the program’s first two rounds. In the most recent cohort, 45 per cent went to households in the bottom three income deciles and 55 per cent to rural households.
Canada could adapt that idea as affordable EV leasing.
Imagine a program targeted specifically to lower- and moderate-income households that need a car for work or lack reasonable transportation alternatives. Instead of asking them to find thousands of dollars for a down payment, the program could offer an EV for $0 down and cap the monthly lease payment at about $250. Automakers and leasing companies would compete to provide qualifying vehicles at the lowest cost. An initial program serving 50,000 households could have a gross federal cost of roughly $600 million.
The important question is what taxpayers would be buying. A gasoline-tax holiday buys temporary relief on every litre of gasoline Canadians consume. Affordable EV leasing would concentrate support on households most exposed to gasoline prices and help some of them stop buying gasoline altogether. In other words, Ottawa could make the savings from electrification accessible to people who need them most.
Charging access would have to be part of the equation too, particularly for renters and households without driveways. Affordable leasing should therefore be paired with apartment, workplace and community charging so participants aren’t forced to rely on more expensive fast charging.
When the gasoline excise tax eventually returns, global oil markets will still be volatile. Another war, supply disruption or geopolitical crisis will eventually send prices soaring again.
We can prepare to suspend the tax again. Or we can start helping more Canadians get off gasoline altogether.
Polaris Strategy + Insight 