Prime Minister Mark Carney is overturning Canada’s electric vehicle mandate, which previously required all new car sales to be electric within ten years, marking a departure from another environmental policy under Trudeau’s leadership. Carney is now implementing stricter greenhouse gas emission standards for vehicle models from 2027 to 2032, aimed at incentivizing automakers to increase production of zero-emission vehicles.
Speaking at a news conference at an auto parts manufacturer in the Greater Toronto Area, Carney emphasized Canada’s new direction in reducing automobile emissions. The updated standards will see a two-fold tightening of GHG emissions requirements, granting the industry flexibility in achieving these targets through various means such as plug-in hybrids, electric vehicles, or more efficient internal combustion engine vehicles.
The government introduced a new national automotive strategy to safeguard Canada’s auto sector and jobs amidst concerns over U.S. President Donald Trump’s push to relocate vehicle production southward. Additionally, Ottawa aims to stimulate the growth of the country’s battery-powered vehicle industry.
Carney envisions that the revised emissions system will lead to 75% of new car sales in Canada being electric by 2035, representing a significant goal, albeit lower than the previous mandate being rescinded. While the exact reduction in carbon pollution from the new system has not been precisely calculated, Carney mentioned it was modeled based on “grams per mile.”
The Liberal government is rolling out a new $2.3 billion program to provide purchase or lease incentives of up to $5,000 for electric vehicles and up to $2,500 for plug-in hybrids to consumers and businesses. These incentives will apply to plug-in vehicles costing under $50,000 and made by countries with which Canada has free trade agreements, excluding vehicles manufactured in China.
Starting next year, the maximum rebates of $5,000 and $2,500 will gradually decrease until the program’s scheduled conclusion after 2030. The government also plans to collaborate with partners to expand the network of EV charging stations nationwide, aiming to simplify the process of charging electric vehicles, particularly in rural and northern communities.
To retain automakers in Canada and counter potential U.S. tariffs, Ottawa intends to provide additional relief to Canadian automakers. By exploring a tradeable credit system, the government plans to reward companies investing in and producing vehicles in Canada, while imposing obligations on companies selling vehicles in Canada without paying tariffs to purchase credits.
Furthermore, funds from the Strategic Response Fund and the Regional Tariff Response initiative will support the auto sector in diversifying to other markets beyond the U.S. In a series of policy shifts, Carney has reversed several environmental policies from the Trudeau era, including scrapping the consumer carbon tax, scaling back on oil and gas emissions caps, and abandoning the tree-planting commitment.
Ontario Premier Doug Ford expressed support for the federal government’s new auto strategy, emphasizing the importance of ending the electric vehicle mandate to enhance the competitiveness of the auto sector. The move comes at a critical juncture for Canada’s economy, with the government aiming to combat challenges faced by workers, businesses, and communities.
As electric vehicle sales in Canada have declined, the government’s decision to pause the EV rebate program has been cited as a contributing factor. Economic uncertainties related to tariffs and waning interest in electric vehicle manufacturer Tesla have also impacted sales, according to a StatsCan analysis.