Hybrid vehicles are regaining ground in Canada. For the first time in several years, sales of hybrids (HEVs) surpassed those of zero-emission vehicles (ZEVs) in the first half of 2025, according to data from S&P Global Mobility. Hybrids captured approximately 13 percent of the market, compared to 9.5 percent for ZEVs.
This trend reverses several years of dominance by battery-electric vehicles. One obvious explanation is the end of the $5,000 federal subsidy for the purchase of ZEVs, combined with a consumer search for practical and affordable solutions.
A compromise appreciated by buyers
Unlike 100-percent electric vehicles (BEVs), which ask of buyers that they get familiar and comfortable with relying on a network of charging stations, hybrids offer a reassuring option for consumers.
For Ryan Robinson, an automotive research specialist at Deloitte, the hybrid constitutes “an intermediate step” for buyers open to electrification but not yet ready to completely abandon the gasoline engine.
Honda and Toyota lead the hybrid push
The success of hybrids is largely based on popular models. Honda Canada already produces the CR-V Hybrid and the Civic Hybrid in Ontario. In 2025, 58 percent of CR-V sales and 64 percent of Civic sales were hybrid models.
At Toyota Canada, hybridity is gradually becoming the norm. The RAV4, its best-selling model, will switch to a fully hybrid base powertrain starting in 2026, following in the footsteps of the Sienna, Sequoia and Camry models. Nearly half of Toyota's sales are now electrified vehicles.
A changing market, still dominated by ICEs
Internal combustion engines retain 73 percent of the Canadian market in 2025. However, their share is eroding as hybrids, plug-in hybrids (PHEVs) and pure electrics gain ground.
It's worth noting that PHEVs are considered ZEVs by Ottawa, as they offer significant electric range, whereas non-rechargeable hybrids (HEVs) only use their electric motor for assistance.
Federal policies: Uncertainty for ZEVs
While the federal government had set a target of 20-percent ZEV sales for 2026, Prime Minister Mark Carney announced in early September that this target would be suspended. Instead, Ottawa is launching a comprehensive 60-day review of its ZEV mandate.
According to Deloitte, that is likely to further delay the mass adoption of ZEVs, leaving the field open for hybrids.
“A good portion of this market will be absorbed by hybrids, while consumers get used to the transition to electrification,” explains Robinson.
Quebec still at the forefront
Quebec is the only province to buck the trend: pure electric vehicle sales there slightly outpaced those of hybrids in the second quarter of 2025, with a market share of 11.8 percent versus 9.4 percent.
Still, all provinces are seeing a decline in ZEV sales due to the end of incentives. For many analysts, the growth of hybrids is set to continue, but the future will directly depend on the direction Ottawa takes at the end of its review period.