Prime Minister Mark Carney will repeal Canada’s electric vehicle mandate, which required all new car sales to be electric over a 10-year period, repealing another Trudeau-era environmental policy.
Instead, Carney is taking a unique approach by introducing stronger greenhouse gas emissions standards for car models from 2027-32 to encourage automakers to produce more zero-emission vehicles.
“Canada will be setting a new, more ambitious, sovereign path to reducing vehicle emissions,” Carney said at a news conference at an auto parts manufacturer in the Greater Toronto Area.
“We are doubling down on greenhouse gas emissions standards and giving the industry flexibility in how to achieve it, whether through plug-in hybrids, EVs or more efficient ICEs. [internal-combustion engine] vehicle. ”
The government has announced a new national auto strategy aimed at protecting Canada’s auto sector and jobs in the face of U.S. President Donald Trump’s desire to move auto production south. Ottawa is also looking to revitalize the country’s battery-powered vehicle industry.
Prime Minister Mark Carney announced a series of investments Thursday as part of a new strategy for Canada’s auto industry, including measures to “make electric vehicles more affordable and reliable for Canadians.”
Carney predicts that with new emissions systems, 75 per cent of new cars sold in Canada will be electric by 2035. That’s an ambitious goal, but still less than the previous mandate Mr. Carney is trying to eliminate.
Government officials said they had not calculated exactly how much carbon pollution the new system would remove. But Carney said that’s modeled on “grams per mile.”
“If domestic vehicle emissions were to increase, emissions would be reduced by 57%,” Carney said.
New incentives for EV purchases
Carney also announced that the Liberal government will launch a new $2.3 billion program that will provide consumers and businesses with purchase or lease incentives of up to $5,000 for EVs and $2,500 for plug-in hybrids.
To be eligible, plug-in vehicles must cost less than $50,000 and be manufactured in a country with which Canada has a free trade agreement, excluding vehicles made in China. Price caps do not apply to Canadian-made vehicles.
However, rebates of up to $5,000 and $2,500 are only available in 2026. Starting next year, both rebates will gradually decrease, with the program expected to end after 2030.
Canada previously offered consumers rebates of up to $5,000 to reduce the cost of plug-in vehicles, but the program ran out of funding more than a year ago due to high demand.
More charging stations
The government also plans to find partnerships to build more EV charging stations across Canada.
“No matter where you live in Canada, charging your car should be as easy as putting gas in your gas tank,” Carney said.
Carney said the $1.5 billion fund is needed because “too many Canadians, especially in rural and northern communities, are worried about being able to reliably charge while traveling.”
Mr. Carney also said the government is preparing to unveil a new power strategy in the coming weeks to double Canada’s grid capacity and make power reliable and affordable.
Tariff relaxation for automakers
To stop Canadian automakers from moving south, Ottawa plans to further reduce U.S. tariffs on Canadian automakers.
The prime minister said the government is considering providing incentives to companies that sell cars in Canada if the U.S. “insists on auto tariffs” during the CUSMA review.
“We will consider strengthening Canada’s auto mitigation framework through a tradable credit system that rewards companies that produce and invest in Canada,” Carney said.
“The bottom line is that companies that manufacture and invest in Canada can earn credits, while companies that want to sell vehicles in Canada without paying tariffs must purchase those credits.”
An additional $3 billion from the Strategic Response Fund and up to $100 million from the Regional Tariff Response Initiative will be earmarked to support the automotive sector’s diversification and growth into other markets outside the United States.
The EV mandate is the latest environmental policy from Trudeau’s era that Carney has dropped. He lowered the consumer carbon tax on his first day in office, but later weakened his promise to introduce caps on oil and gas emissions and abandoned Trudeau’s pledge to plant 2 billion trees.
Prime Minister Mark Carney was asked Thursday whether he still considers himself a leader on climate change, after the Canadian government announced it would end its electric vehicle mandate. Mr Carney said the government was considering developing a new electricity strategy and tightening greenhouse gas emissions standards, but giving industry “flexibility” on how to achieve it.
Asked if he considered himself a leader on climate change, Mr. Carney said: “I definitely do.”
“I believe Canada is a leader on climate change and focused on the consequences and solutions of climate change,” he said.
Mr Carney outlined a list of environmental plans, including “extensive” direct support and tax incentives for clean energy production chains. Mr Carney called it “the most competitive investment regime for the auto sector”.
Green Party Leader Elizabeth May welcomed the reintroduction of the rebate, but said the suggestion that Canada is a leader on climate change is “a complete joke.”
“What happens to the rest of the program? We have Swiss cheese and you just added more holes,” she said, pointing to the repeal of the sales mandate and other Trudeau-era climate change policies that Carney repealed.
Asked Thursday what he thought about Premier Mark Carney calling himself an environmental leader, Interim NDP Leader Don Davis said, “I think the facts completely belie that.” Earlier in the day, Mr. Carney said he still considers Canada a leader on climate change after the government announced it would scrap the EV mandate.
As he did in May, interim NDP Leader Don Davis welcomed news of the reinstatement of rebates and the auto strategy, but said Carney’s track record falls short of his own, as he claims to be a leader on climate action.
“I think the facts completely belie that,” Davis told reporters at the Capitol.
Davis said the Liberals’ auto strategy needs to focus on expanding production of affordable EVs in Canada.
Conservative industry commentator Raquel Dancho criticized Thursday’s announcement as an “insult” to Canadian autoworkers and argued it would only help U.S. companies. He said in a statement that the Liberal Party should support workers by delivering on its promise to secure a trade deal with the United States.
“This announcement is evidence that the Liberal Party is more interested in ideological campaigns than in striking trade deals and supporting Canadian workers,” Dancho said in a statement.
Ontario Premier welcomes relocation
Ontario Premier Doug Ford immediately issued a statement saying he welcomes and supports the federal government’s new auto strategy.
“Ontario has been calling on the federal government to end the electric vehicle mandate because it is under attack by President Trump, making the auto sector less competitive, hurting investment, and threatening jobs,” said Ford.
After Prime Minister Mark Carney announced the Liberal government’s new auto strategy Thursday morning, Conservative MP Kyle Seeback criticized the plan’s EV subsidies, saying “the details here are terrible for Canadian auto workers.”
The automotive sector is a major employer in Ontario.
“This is a pivotal moment for Canada. Our economy and sovereignty are under attack. We need a strong, united Team Canada to fight back to protect our workers, businesses and communities,” Ford said in a statement.
The federal government’s new strategy comes in response to slumping sales of electric vehicles.
Monthly sales data released by Statistics Canada shows that new EV sales in early 2025 were clearly in decline and never recovered from the previous year’s highs. The decline coincided with the government’s decision to suspend the widely used EV rebate program.
In addition to a lack of government incentives, economic uncertainty related to tariffs and a decline in interest in EV giant Tesla all weighed on sales. StatsCan analysis.