EV industry could add $104-billion to Canada’s economy by 2040, report forecasts

The electric vehicle industry could add $104-billion a year to Canada’s economy and employ nearly 800,000 Canadians by 2040 – but only if Ottawa keeps EV-friendly policies and battery technology continues to get better and cheaper, a new report forecasts.

The report, conducted by Ernst & Young LLP (EY Canada) for Electric Mobility Canada (EMC), a Montreal-based EV industry association, predicts that the industry’s contribution to GDP and jobs will likely grow by nearly four times – from an expected $24-billion and 186,000 jobs next year – by 2040.

The numbers, which include mining, battery and vehicle manufacturing and the deployment of charging infrastructure, are based on a medium-case scenario where Canada keeps its EV mandate and where the economic uncertainty we’re seeing now from yo-yoing U.S. tariffs eventually settles, says EMC chief executive officer Daniel Breton.

“No one expects this level of uncertainty to last for five years. This week, next month, maybe next year, things will stay uncertain – but we’re looking beyond that,” Breton says. “The ball is already rolling. Car makers have invested tens of billions of dollars in this industry.”

For that level of growth to happen, EV sales need to grow to 100 per cent as a percentage of all vehicles sold by 2035, Breton says.

“It doesn’t mean that every year will reach our target because it’s an up-and-down battle all the time,” Breton says. “We still want to reach 100 per cent by 2035, but in the next couple of years things might get more complicated.”

But the expected jobs and economic growth don’t entirely depend on Canadian EV sales.

“More than 90 per cent of cars built in Canada are not sold in Canada,” he says. “We’re talking about an entire industry. When we’re talking to mining companies, to auto makers, truck makers, bus makers and utilities, this is where it’s going.”

Temporary slump?

So far this year, Canadian EV sales are down from record numbers last year – largely owing to a sudden pause of the $5,000 federal EV rebate in January. According to J.D. Power data on car makers that produce both EVs and gas-powered cars, EVs counted for about 3 per cent of national sales in March compared to more than 11 per cent in 2024.

Breton expects sales, which have been growing every year, to rebound later this year and he discounts polls showing waning interest in EVs. While some buyers may be wary now, he expects that to change over the next decade “because the technology is getting better and more [cost] competitive.”

“If you say that people don’t want them, well … 3 to 4 per cent of [all cars on the road] are electric now,” Breton says.

But 100 per cent of EV sales by 2035 doesn’t mean 100 per cent of the cars on the road will be electric by then.

“The majority of the cars on the road [in 2035] will still be gas and diesel,” he says. “It will take another 15 years [until 2050] for the whole fleet to be electric.”

The EV industry also includes transport trucks and buses, and those sectors are expected to grow, Breton says.

But even in the report’s worst-case scenario – where prices increase and production slows for years because of U.S. tariffs, where a new Canadian government weakens or pulls EV mandates and rebates, where battery technology advances more slowly than expected and where new charging infrastructure doesn’t get built – the EV industry will still add $60-billion a year to the economy and employ 460,000 Canadians by 2040.

“It’s hard to see through all the hype around [U.S. President] Donald Trump and tariffs these days,” Breton says, pointing to investments auto makers have already made, including Honda’s $15-billion deal to build Ontario EV plants and Volkswagen’s investment in a battery plant in St. Thomas, Ont. “They’re investing for generations, not for two years or five years from now.”

Even if the U.S. rolls back its strict tailpipe emissions standards and Ottawa pulls the EV mandate, the transition to EVs may slow but it won’t stop, he says.

“When the technology becomes more and more competitive, no matter how much you try to bring back Blackberry or Blockbuster, it’s not happening,” Breton says. “Ten years ago, the average range of an electric car was 150 kilometres. Five years ago, the average speed of [fast charging to 80 per cent] was over an hour. Now, the average range is … 450 kilometres and the best cars charge in 15 to 20 minutes – and it’s getting better.”

Best-case scenario too optimistic?

Then, there’s the best-case scenario, where a stable economy, even stronger government support and major breakthroughs in battery technology grow the industry’s GDP and employment by more than six times by 2040 – to $192-billion and 1.3 million jobs.

But that would require Ottawa to pursue aggressive policies such as what China and Norway have done.

“There’s all sorts of policy not only to encourage the transition to electric vehicles but to discourage people from buying gas vehicles,” Breton says. “We could look at a system where people who buy gas vehicles would have to pay a penalty.”

But, given the recent demise of the consumer carbon tax, are we likely to see those sorts of policies any time soon?

“Honestly, I don’t think so,” Breton says. “That scenario is very optimistic.”

Editor’s note: A previous version of this article incorrectly stated that in the best-case scenario the EV industry’s contribution to GDP could grow to $192-million by 2040. The estimate is $192-billion.