Canada’s electric vehicle strategy may be shifting gears, with certain requirements imposed on businesses being delayed as Ottawa considers a new approach.
Prime Minister Mark Carney announced on Friday the federal government is delaying plans to impose minimum sales requirements on car companies for 2026 model years of electric vehicles (EVs), and a 60-day review is being launched that will reassess the current EV mandate program.
“To add flexibility to the automotive sector, we will remove the 2026 electric vehicle availability standard, which specifies the share of new vehicle sales that must be electric next year. This will provide immediate financial relief to automakers at a time of increased pressure on their competitiveness,” Carney said in a speech on Friday.
This come as companies, especially those in the auto sector, say that they have been pressured by higher costs from tariffs in addition to requirements from the federal government to meet electric vehicle sales targets that are proving difficult in recent years.
“Automakers have paid out $12 billion USD in tariff costs. The last thing that we should be doing is putting further costs on Canada’s manufacturing sector when we’re trying to make our way through this increase in protectionism,” says Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers Association.
“We’re encouraged that the government has paused the mandate, that they’re going to undertake a review in 60 days. And we’re looking forward to working with them to getting to the right and final result on this.“
Industry representatives say the best way forward in such a difficult economic landscape is to make it easier for consumers to “make the switch” to electric through incentives and rebates, rather than force companies already under cost pressures.
“Our association members are pleased that the government has recognized that circumstances have changed considerably since the EV standard was put in place,” says David Abrams, president and CEO of Global Automakers of Canada.
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“I think it’s a reflection of the fact that the market uptake has not been as robust for EVs as had been anticipated.”
Launched by former prime minister Justin Trudeau, the Liberal Party’s electric vehicle mandate aims to have every vehicle sold in Canada be 100 per cent emission-free by the year 2035.
This includes specific targets companies must reach each year on the way to 2035.
Earlier this year, data showed sales for electric vehicles in Canada were on the decline.
A global survey of consumers released earlier this year by Shell found that higher costs and a lack of reliable charging infrastructure were the main reasons potential EV buyers said they had not purchased one yet.
At the same time, separate data from Statistics Canada showed electric vehicle sales in Canada are on the decline.
“EV regulation does nothing to help Canadians make the switch to electric. Electrification is happening in the industry, that is a given, but what we need is policies to help Canadians make that switch,” says Kingston.
“We have a massive shortfall of public charging infrastructure and it is growing every single year, and we need to get on top of that to give people the confidence to switch. And we used to have a suite of incentives across Canada to help Canadians with that purchase. Those all disappeared over the last year.”
Zero emissions vehicle sales hit nearly 17 per cent of all vehicles sold in 2024, according to ElectricAutonomy, and with government incentives at the time, the forecast was for that figure to nearly double to 30 per cent by 2027.
In January of 2025, federal incentives were paused as funding had run out before the March deadline.
In June, Environment Minister Julie Dabrusin told reporters outside the House of Commons that “there will be a consumer rebate,” with few other details given at the time.
“We saw the impact of the cost factor when the government removed its federal incentive program. The government has talked about bringing back that incentive program, but that remains to be seen whether that will actually occur,” says Abrams.
“I think cost is the number one issue, preventing people from making the purchase, followed shortly by the visibility, reliability and speed of the charging infrastructure as well. So those two things, if we can crack those nuts, then I think we could start to see a little bit more robust adoption of electric vehicles.
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