A significant shift is underway in Canada’s automotive policy. Prime Minister Mark Carney announced the dismantling of the previous administration’s electric vehicle mandates, a policy that aimed for a complete transition to zero-emission vehicles.
The original plan, enacted under the previous government, would have required automakers to ensure that 20% of new vehicle sales were zero-emission by 2026, escalating to 100% by 2035. This effectively signaled a future ban on the sale of new gasoline and diesel-powered cars and trucks.
Instead of the mandates, Canada will now implement new emission standards for vehicles. This represents a softer approach, focusing on reducing overall emissions rather than dictating the type of vehicle Canadians can purchase.
To incentivize the adoption of electric vehicles, the government is reintroducing rebates for consumers. Buyers of new electric vehicles priced under $50,000 will be eligible for a $5,000 rebate, while those choosing plug-in hybrids can receive $2,500.
These rebates are slated to continue until 2030, or until the allocated $2.3 billion fund is exhausted. The program’s goal is to add 840,000 new electric vehicles to Canadian roads.
A key stipulation of the rebate program is that eligible vehicles must be imported from countries with which Canada has a free trade agreement. This specifically excludes electric vehicles manufactured in China, despite recent trade discussions.
The previous mandates faced strong opposition from the automotive industry, which argued they imposed unsustainable costs and threatened Canadian jobs. Automakers expressed relief when the new Prime Minister paused the program last fall.
The industry voiced concerns about declining public interest in EVs and the scaling back of ambitious EV projects by several manufacturers. They advocated for a complete repeal of the regulations to maintain competitiveness.
Carney acknowledged the financial pressures facing automakers and emphasized the need for flexibility within the sector. The 60-day review initiated in September confirmed the industry’s concerns and paved the way for the policy reversal.
The decision echoes a similar move by the United States, where President Trump scrapped EV mandates shortly after taking office. Canada’s automotive landscape is now undergoing a period of recalibration, prioritizing a more balanced approach to vehicle emissions.
