Facing uncertainties in the electric vehicle market and trade tensions between Canada and the United States, Volkswagen Canada is preparing to expand its lineup with hybrid models.
VW Canada President Edgar Estrada confirmed the strategy during the Automotive News Canada Retail Forum, held in Toronto this past Tuesday. According to him, the message from the Canadian market is clear: consumers want cleaner vehicles, but ones that are easy to adopt.
“The investment is approved, the announcements have been made, and we are actively working to bring these hybrids to the Canadian market as quickly as possible,” he said.
Hybrids take the lead
Data from S&P Global Mobility reveals that in the first half of 2025, sales of hybrid vehicles surpassed those of 100-percent electric vehicles (EVs), becoming the most popular alternative powertrain in Canada with about 13 percent of total sales.
Until now, Volkswagen has only offered gasoline or fully electric models in Canada, despite the steady growth of the hybrid category over the past five years. Estrada did not specify which models will receive hybrid technology, but he confirmed that two vehicles are already being adapted to accommodate a hybrid powertrain.
Although no official date has been set for Canada, their introduction to the U.S. market is not expected for at least two years.
Hybrids as a transition to all-electric
Despite the challenges in the EV market, Volkswagen continues to see electrification as the future of mobility. However, Edgar Estrada acknowledges that hybrids offer customers a "more familiar and reassuring transition" into the new era.
While waiting for the arrival of hybrids, VW is relying on updated ICE models to support sales in the short term. The new Tiguan is already on the market, while a redesigned Atlas is coming in 2026.
Maintaining momentum despite slowed sales
After a record year in 2024, VW Canada aims to beat its own results in 2025, 2026, and 2027. That won’t be easy, though - the brand's sales declined by 1.7 percent in the first nine months of 2025, according to the Automotive News Research & Data Center. The main reason for that is a 50-percent drop in sales of the ID.4, Volkswagen's flagship EV. The Atlas, Tiguan and Golf also recorded double-digit declines, partially offset by the strong performance of the Jetta and Taos.
Customs tariffs under scrutiny
The trade war between Canada and the U.S., which has been ongoing for more than six months, is affecting several automakers, and Volkswagen isn’t being spared. The ID.4, Atlas and Atlas Sport models are assembled in Chattanooga, Tennessee, which makes them currently subject to a 25-percent Canadian counter-tariff.
Estrada did stress that the impact of tariffs remains limited, since the majority of VW Canada's sales are of vehicles manufactured in Mexico and Europe, which aren’t taxed on entry.
To limit price increases on those that are, VW says it’s seeking to distribute the cost of the tariffs fairly among the manufacturer, its dealerships and consumers, while striving to keep its vehicles as affordable as possible.