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OTTAWA — The federal government has unveiled a new national automotive strategy that replaces Canada’s former electric vehicle sales mandate with emissions-based standards, renewed consumer incentives and measures aimed at strengthening domestic vehicle manufacturing.
The strategy, announced last week by Prime Minister Mark Carney, repeals the federal requirement for all new light-duty vehicle sales to be zero-emissions by a set date. In its place, Ottawa plans to regulate vehicle emissions based on grams of carbon dioxide per kilometre, alongside stricter fuel-efficiency rules.
The plan includes a five-year, $2.3 billion EV affordability program, restoring federal purchase incentives of up to $5,000 for battery electric vehicles and up to $2,500 for plug-in hybrids priced under $50,000. Those rebates are scheduled to decline annually and be eliminated within five years.
Federal officials have acknowledged that detailed emissions modelling for the revised framework has not yet been completed. The government says emissions impacts will be assessed as policies are translated into regulations, in line with federal climate accountability requirements.
Under the strategy, Ottawa is targeting electric vehicles to account for 75 per cent of new vehicle sales by 2035 and 90 per cent by 2040 through emissions standards rather than sales mandates.
The announcement drew a range of reactions across the auto and climate sectors. Ontario Premier Doug Ford and industry groups representing major automakers expressed support for the shift away from mandatory sales targets. Environmental organizations and several climate researchers raised concerns that scrapping the EV mandate could slow the transition away from gasoline-powered vehicles.
Transportation remains Canada’s second-largest source of greenhouse gas emissions, behind oil and gas production. Analysts say uncertainty now centres on whether the new emissions-based system will be stringent enough to drive long-term reductions in tailpipe pollution.
The strategy also reflects a broader industrial focus, with the federal government positioning the policy as a means to protect and expand auto manufacturing in Canada amid global trade pressures, including tariff threats from the United States. Industry Minister Mélanie Joly has said the approach is intended to reinforce domestic production and supply chains.
Ottawa says further details on emissions regulations, incentive eligibility and implementation timelines will be released as the strategy moves forward.
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