When Canada scrapped its electric vehicle (EV) mandate and sales slumped, the immediate headlines focused on automakers, big investments and plant closures. But the fallout from that policy reversal is reaching far beyond OEMs, touching corners of the supply chain that most consumers – and many business owners – rarely think about.
For Derrick Osborn, national practice leader, automotive, at HUB International, the scrapping of the mandate and the collapse in confidence around EV demand have reshaped the entire ecosystem.
"Anybody who's made any investment into this space… is going to have to reforecast all the revenues because everything's dropped down. They've probably made investments that have to be repurposed, if they possibly can be,” Osborn says.
That’s the visible part of the story. Beneath it sits a web of less obvious players – body shops, marine cargo insurers, and importers who can suddenly find themselves treated as manufacturers in the eyes of the law – all absorbing new exposures as Canada leans on imported EVs rather than domestic production.
One of the clearest examples is collision repair.
On paper, body shops aren’t part of the EV supply chain. They don’t design, build or sell vehicles. They simply fix them when something goes wrong. But in practice, Osborn says, they’re feeling the knock‑on effects of a market where EV parts, and especially batteries, are harder to come by.
“With a regular ICE vehicle, it might be in the shop five days, it might be there ten days – boom, in and out, do the repair and it’s gone,” he explains. “With the supply chain issues that you have on an EV, maybe it’s sitting there six weeks because you can’t get the parts.”
That shift in cycle time has a direct impact on risk. Every extra day an EV sits on a lot extends the period it’s in the shop’s care, custody and control. If a fire, theft or other loss occurs during that time, the shop’s own insurance program is on the hook.
“It went from two weeks to six weeks worth of exposure for having a vehicle in their care, custody and control,” Osborn says. “They’ve got more exposure as just a shop owner for nothing that they’ve done.”
The longer dwell times also have an obvious operational cost. A bay tied up with a waiting‑on‑parts EV is a bay that can’t be used for another paying job. That’s top‑of‑mind for small and mid‑sized repairers who, as Osborn notes, may be focused more on “the real in‑front‑of‑your‑face cost” than on how their insurance exposures are shifting.
Layered onto that is a talent issue. Working safely on high‑voltage EV systems isn’t the same as repairing a conventional internal combustion engine (ICE) vehicle. Technicians need specialised training and licensing.
“Your technicians – they’re few and far between, they’re expensive. And so again, when the adoption rate’s low, you’re not going to have a ton of these people available. If there’s a ton of them available, the price goes down and then it becomes cheaper to insure, cheaper to repair.”
Instead, shops are stuck in a familiar feedback loop: low EV penetration means fewer trained technicians and less investment in dedicated EV repair capacity, which keeps costs high and slows turnaround, which in turn contributes to higher insurance premiums and continued reluctance among consumers.
The risks aren’t limited to land‑based operations. Moving EVs and their batteries across oceans is also creating headaches for marine cargo underwriters.
“When you’re talking about the marine cargo, a lot of [carriers]… don’t like having batteries on those ships,” Osborn says. “They don’t want the fire hazard. So you do have to keep an eye on that.”
Lithium‑ion batteries pose a well‑documented fire risk if damaged or improperly handled.
Osborn pointed to the Felicity Ace as an illustration of what can go wrong. The vehicle carrier, whose cargo included Porsche, Audi, Bentley and Lamborghini vehicles, caught fire in 2022 and subsequently sank, with cargo estimated at over $400 million. The cause of the fire remains unknown – but the incident put the industry on notice about the risks of concentrating high-value vehicles and batteries in a single hold.
Concentrating the batteries in ships’ holds or on vehicle carriers raises the stakes. That means tighter controls, higher premiums, and in some cases outright reluctance from carriers to take on certain loads – all of which feeds into the cost and complexity of getting EVs and parts into Canada.
Then there are the importers.
With Honda and other major manufacturers re‑evaluating their EV strategies in Canada, the country is increasingly reliant on vehicles and components built elsewhere. When those products arrive without a strong domestic manufacturing footprint behind them, the legal and insurance burden often shifts.
“As the importer into Canada, if there’s no manufacturing here, I assume all of the liability of the manufacturer,” Osborn explains. “If there’s nobody to sue domestically, I’m going to sue the person who brought it into the country. And that person then has to respond as if they are the manufacturer.”
That dynamic turns what might look like a straightforward distribution business into something far riskier. Importers can suddenly find themselves exposed to product liability suits, recall obligations and defect claims on a scale they never anticipated, particularly if they lack robust contracts, quality‑control processes and insurance programs tailored to those exposures.
All of this, Osborn stresses, flows from the same root cause: a policy‑driven EV investment wave built on a mandate that was later removed, leaving Canada with limited domestic production and a fragmented support ecosystem.
“It’s all part of the same ecosystem,” he says. “The mandate shifted everything… there’s a lot of consequences for anybody who’s involved in that. Now they’re not selling what they thought they would.”
