Federal review of electric vehicle targets signals new direction for Canada's auto and investment sectors
Canada’s plan to require automakers to hit minimum electric vehicle (EV) sales levels by 2026 is on hold, a move that signals a major policy shift amid mounting trade pressures and industry pushback, according to Bloomberg.
Prime Minister Mark Carney’s government announced the pause on the federal EV mandate Friday in Mississauga, Ont., as part of a broader strategy to support sectors most affected by US President Donald Trump’s tariffs, reported by BNN Bloomberg.
The government will conduct a 60-day review of the electric vehicle availability standard, waiving the 2026 model year target while it reassesses the policy’s impact and next steps, as per CBC News.
The zero-emission vehicle (ZEV) mandate, introduced by former Prime Minister Justin Trudeau, set escalating sales targets for automakers and importers—beginning at 20 per cent in 2026 and reaching 100 per cent by 2035.
Under the mandate, manufacturers failing to meet targets would have been required to restrict sales of internal combustion engine vehicles or purchase credits from companies such as Tesla Inc., according to Bloomberg.
Industry groups have applauded the pause.
Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association, called it “an important first step,” stating, “The EV mandate imposes unsustainable costs on auto manufacturers, putting at risk Canadian jobs and investment in this critical sector of the economy.”
David Adams, president of Global Automakers of Canada, emphasized that “Our members are fully committed to the transition of their product portfolios to electrified transportation and this is the future of our sector.”
He added, as reported by CBC News, that the pace of this transition ultimately depends on how quickly consumers are willing to adopt these changes.
The Canadian auto industry, highly integrated with the US sector, has faced production cuts at Ontario assembly plants by GM and Stellantis since the trade war began, as noted by Bloomberg.
The government’s announcement is part of a suite of measures. These include more loan flexibility for businesses impacted by tariffs and new support for laid-off workers.
The package also features the launch of a $5bn Strategic Response Fund and a trade diversification strategy. According to BNN Bloomberg, the goal is to increase Canadian exports to overseas markets to 50 per cent by 2030.
The pause has also drawn sharp criticism from environmental groups and opposition parties.
Keith Stewart, senior energy strategist with Greenpeace Canada, questioned, “What was the point of electing Mark Carney when we get Pierre Poilievre's climate policy?”
Rick Smith, president of the Canadian Climate Institute, called the announcement a “missed opportunity” that creates uncertainty and undermines climate policy in a critical sector, as per CBC News.
Conservative Leader Pierre Poilievre described the decision as a “clumsy retreat.” He argued that businesses considering investment in Canadian automaking will now have to delay those plans “while Mark Carney dithers for another year,” according to BNN Bloomberg.
The government is also considering the return of a consumer rebate program to make electric vehicles more affordable.
Canada’s previous ZEV rebate, which offered up to $5,000 for new electric cars and up to $2,500 for new plug-in hybrids, was paused in January after funding ran out.
Environment Minister Julie Dabrusin has suggested a new rebate program may be introduced, as reported by CBC News.
Carney’s approach marks a shift away from the climate agenda of his predecessor, including the cancellation of the consumer carbon price and the digital services tax, according to Bloomberg.
Some Liberal MPs plan to raise climate issues at the upcoming caucus meeting in Edmonton, as concerns grow that green initiatives have been relegated since Carney took office, as per CBC News.
Canada and the US have been engaged in a trade war since February, with the US imposing tariffs on Canadian goods, including steel, aluminum, copper, and autos.
Carney has withdrawn many retaliatory tariffs and exempted goods covered by the Canada-US-Mexico Agreement, aligning Canada’s levies with those of the US, as reported by BNN Bloomberg.
The government has also announced a “Buy Canadian” policy for federal procurement and funding, aiming for full implementation by spring 2026.
The government’s review of the EV mandate is expected to be swift and evidence-based, as stakeholders across the political and industrial spectrum await further developments.
