Former Prime Minister Justin Trudeau drives a bolt during the installation of a front end assembly on a Honda CRV during an event at the Honda of Canada Manufacturing Plant 2 in Alliston, Ontario, Canada, on April 25, 2024 (Photo by Peter POWER / AFP)
Prime Minister Mark Carney says he will abolish the electric vehicle mandate while replacing it with emissions regulations that he says will achieve a similar objective of reaching widespread EV adoption by consumers.
Carney announced on Feb. 5 that Ottawa will repeal the electric vehicle mandate that would have required automakers to produce and sell only electric vehicles by 2035. Instead, Carney said the government will put in place tougher greenhouse gas (GHG) emissions standards for model years 2027 to 2032. The revised aim is to reach an EV adoption rate of 75 percent by 2035 and 90 percent by 2040.
“The more stringent emission standards will enable the government of Canada to repeal the electric vehicle accessibility standard,” Carney said in Vaughan, Ont., on Feb. 5.
Consumer incentives for EV purchases will also be returning. The government will introduce a five-year, $2.3 billion EV Affordability Program offering purchase incentives of up to $5,000 for battery electric and fuel-cell vehicles and up to $2,500 for plug-in hybrids. Incentives will apply to vehicles priced up to $50,000 from countries with free trade agreements, with no price cap for Canadian-made EVs and hybrids.
Ottawa will also allocate funding to charging and hydrogen refuelling infrastructure through a $1.5 billion program delivered by the Canada Infrastructure Bank. Carney said that in the coming weeks, the government will announce a new electricity strategy to double the country’s grid capacity, aiming to deliver more efficient and affordable electricity to support EVs.
The federal government’s previous EV mandate, launched in 2023, had required car manufacturers and importers to have 20 percent of their sales be EVs starting in 2026, with the target of reaching 60 percent by 2030, and eventually 100 percent in 2035. Automakers unable to meet the 2026 target could purchase compliance credits from competitors and limit sales of internal combustion vehicles.
The move to scrap the EV sales mandate follows pressure to do so from the auto industry and several provinces. Automakers argued that the strict mandate was unrealistic and costly, especially amid U.S. trade pressures and slow consumer uptake.
On Sept. 5, 2025, Carney announced the pausing of the 2026 EV sales targets, and launched a 60-day review of the program.
That announcement also came as the United States had imposed 25 percent tariffs on Canadian vehicles and automotive parts, and U.S. President Donald Trump signed resolutions blocking an EV mandate in California and 17 other states.
Meanwhile, the Feb. 5 announcement included $3 billion for industry from the Strategic Response Fund, aiming to help automakers adapt and diversify, maintain counter-tariffs on U.S. auto imports, and expand worker supports, including reskilling and employment assistance for up to 66,000 workers.
Carney told reporters that with the upcoming review of the Canada-United States-Mexico Agreement (CUSMA), Canada is in favour of a zero-tariff regime with the U.S. auto sector, but said if the United States “insists on some form of auto tariffs” during USMCA negotiations, Canada will “ensure that companies that sell vehicles in Canada are strongly incentivized to produce in Canada.”
Canadian government officials speaking on background said that there are currently 11 makes and 20 models that are valued at $50,000 that can benefit from the new incentives. The federal government expects the EV subsidy program will apply to 840,000 vehicles in Canada.
Officials said that no cars manufactured in China will qualify for the new incentive. Ottawa recently announced a deal with Beijing where Canada will reduce its tariffs on Chinese EVs from 100 percent to the “most-favoured-nation” tariff rate of 6.1 percent on 49,000 EVs per year, increasing to approximately 70,000 after five years. China is expected to lower tariffs on Canadian food products like canola, lobsters, crabs, and peas.
Officials told reporters during the technical briefing that because the government is in the process of modelling the new program’s impact on planned emissions reductions, there are currently no figures to compare it to what the initial EV mandate sought to achieve.
“It will depend on how the stringency of the GHG standards changes year over year, and that will be done as part of that process and in consultation with the stakeholders to make sure that it’s ambitious but also achievable,” the official said.
When asked by a reporter if the federal government’s goal is to eventually stop the domestic production of internal combustion engine vehicles altogether, an official said they are ensuring the automotive industry can produce the “vehicle of the future,” that is “increasingly electrified and increasingly connected.”
The official also said Canada will maintain its reciprocal counter-tariffs on light-duty vehicles imported from the U.S., but the government will launch consultations to strengthen Canada’s automotive duty remission framework.