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The Tesla Model Y charging in Jasper, Alta.Jason Tchir/The Globe and Mail

In recent months a flurry of headlines have warned of a looming slowdown in demand for electric vehicles, but the number of new EVs hitting the roads in Canada continues to surge, driven by sales of battery-powered SUVs and crossovers.

And one model of EV is behind much of the increase: the Tesla TSLA-Q Model Y, now Canada’s most popular electric vehicle.

In the third quarter, Canadians registered roughly 457,800 new vehicles, a more than 16-per-cent increase from the same period in 2022, according to Statistics Canada. Over the same period the combined sales of battery electric and plug-in hybrid vehicles jumped 62 per cent.

Almost all of that growth came from zero-emission SUVs and crossovers.

Why the surge in the past two quarters? Erik Johnson, senior economist at Bank of Montreal, points to changes Tesla made to its Model Y lineup. Earlier this year Tesla rolled out a cheaper rear-wheel drive version of its mid-size electric SUV that qualifies for the federal government’s $5,000 Incentives for Zero-Emission Vehicles rebate.

Since that model became available in April, one out of every five EVs sold that qualify for the rebate has been a Model Y, an analysis of Transport Canada data shows.

“That has drastically reshaped the market,” Mr. Johnson said. “Tesla was already in the top spot with the Model 3, but the Model Y meets more Canadian buyer expectations on vehicle size.”

Decoder is a weekly feature that unpacks an important economic chart.

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