Carney Revamps Canada’s Auto Industry: Goodbye EV Sales Mandate, Hello Purchase Rebates

Prime Minister Mark Carney has announced significant changes to Canada’s automotive landscape, including the repeal of the previous electric vehicle (EV) sales mandate. This move marks a shift from the environmental policies of the Trudeau administration.

New Automotive Strategy for Canada

Carney’s new approach includes the introduction of stringent greenhouse gas (GHG) emission standards for vehicles manufactured between 2027 and 2032. This strategy aims to enhance the production of zero-emission vehicles.

At an auto parts facility in the Greater Toronto Area, Carney stated, “Canada will set a new, more ambitious sovereign path to reduce automobile emissions.” The GHG emissions standards will be tightened by twofold, giving manufacturers flexibility in achieving compliance.

Goals and Investments

The government aims for 75% of new car sales in Canada to be electric by 2035. This target is ambitious but falls short of the former mandate requirements. Carney indicated that the revamped emission standards would lead to a 57% reduction in emissions based on grams per mile.

Incentives for Electric Vehicles

• The government is launching a $2.3 billion program to facilitate purchasing or leasing electric vehicles.
• Consumers can receive incentives of up to $5,000 for EVs and $2,500 for plug-in hybrids.
• Vehicles must be priced below $50,000 and manufactured in countries with Canadian free trade agreements.

The rebate program will gradually decrease starting in 2026, decreasing by $1,000 and $500 annually, respectively, until it concludes in 2030. Previous rebate programs exhausted funding due to high demand.

Infrastructure Developments

The federal government plans to collaborate with partners to expand EV charging stations throughout Canada. “Charging your vehicle should be as simple as filling your gas tank,” stated Carney, emphasizing the need for reliable access to charging facilities, particularly in rural and northern areas.

A $1.5 billion fund will support these initiatives. Furthermore, a new electricity strategy will be released to enhance grid capacity and improve electricity reliability and affordability.

Support for Canadian Automakers

In a bid to retain automakers in Canada amidst potential U.S. tariffs, the government will provide financial relief and explore a tradeable credit system. This system would reward automakers producing in Canada while imposing costs on those not complying with tariff agreements.

An additional $3 billion from the Strategic Response Fund and up to $100 million from the Regional Tariff Response initiative will assist the auto sector’s diversification efforts beyond the U.S. market.

Political Reactions

Ontario Premier Doug Ford supported the new strategy, emphasizing that the repealed EV mandate hindered competitiveness and threatened jobs. “This is a pivotal moment for Canada,” he declared.

The new approach comes as EV sales in Canada have recently declined, partly due to the halt of the previous rebate program and economic uncertainties.