The Economics of EV Mandates in British Columbia

BC is on track for a collision between policy and the market. 

The province’s zero-emission vehicle mandate calls for 26% of new sales to be what are deemed zero-emission vehicles (ZEVs) for the 2026 model year, but with incentives gone, actual consumer demand has fallen closer to 16% (Energy Futures Institute, 2025). That gap of about 20,000 vehicles in B.C.’s annual 220,000 new vehicle market (Statistics Canada, 2025) forces automakers into tough choices.

They can cut prices on ZEVs, buy credits from over-compliers like Tesla, or reduce the number of gas-powered cars they sell, likely shifting what’s left toward higher-margin models. Each option comes with trade-offs: higher vehicle prices, tighter supply for popular internal combustion engine (ICE) models, and spillover effects in the used market and in rural or northern communities where ZEVs are less practical.

This brief explores how the pressures could play out and the economic distortions that may follow with a 26% ZEV sales requirement. With the mandate rising to 90% by the 2030 model year and 100% by 2035, the pressure will only grow, making it important to understand the market impacts behind these targets.

Jerome Gessaroli is a senior fellow with the Macdonald Laurier Institute. He writes on economic and environmental matters, from a market-based principles perspective. Jerome teaches full-time at the British Columbia Institute of Technology’s School of Business, courses in corporate finance, security analysis, and advanced finance. He was also a visiting lecturer at Simon Fraser University’s Beedie School of Business, teaching their undergraduate and executive MBA programs.

Jerome is the lead Canadian co-author of 4 editions of the finance textbook, Financial Management Theory and Practice. He holds a BA in Political Science and an MBA from the Sauder School of Business, both from the University of British Columbia. Prior to teaching, he worked in the securities industry. Jerome also has international business experience, having worked for one of Canada’s largest industrial R&D companies developing overseas business opportunities in China, Hong Kong, Singapore, and India.