Impacts of ending consumer purchase incentives on electric vehicle adoption: Evidence from interrupted time series analysis

As electric vehicle (EV) markets mature and governments worldwide consider ending costly financial incentives, there is a lack of empirical evidence on the sustained effectiveness of these incentives once they are reduced or eliminated. Exploiting the sudden pause of the Canada iZEV purchase subsidy program as a natural experiment and using the quasi-experimental controlled interrupted time series approach, this nationwide study estimates the causal impacts of the purchase subsidy on the uptake of zero-emission electric vehicles (ZEVs) over the 7-year period from 2019 to 2025. The results show that after accounting for the pre-pause quadratic growth trend in ZEV adoption, ending the purchase subsidy in the first quarter of 2025 immediately reduced the new ZEV adoption rate by 10.2 percentage points, representing more than half (55%) of the adoption rate that would have been observed in the absence of the subsidy exit. Furthermore, the new ZEV adoption rate grew only linearly over time in the post-subsidy period, losing the quadratic growth enjoyed in the pre-pause period. Our analysis also reveals substantial heterogeneity in the impacts of ending the purchase subsidy across ZEV types (battery EVs vs. plugged-in EVs) and across regions with different population sizes and EV market maturity. These findings help inform the boundaries of subsidy effectiveness, the design of subsidy exit schemes, and the forecasts of policy impacts, thus supporting more efficient allocation of public resources.