The national automotive strategy is set to be revealed by the federal government on Thursday. The plan will involve replacing Canada’s electric vehicle mandate with a new framework of fuel efficiency standards and credits, according to information obtained by CBC News.
Prime Minister Mark Carney has faced pressure from various stakeholders, including leaders in the auto industry, several provinces, and the Conservative party, to eliminate the existing targets that require a significant percentage of new vehicles to be electric by certain deadlines.
Carney had previously halted the 2026 targets and initiated a review of the EV mandate due to concerns about the challenges faced by the Canadian auto sector, particularly related to U.S. tariffs imposed by President Donald Trump.
Industry insiders have indicated that the government is moving towards abandoning the EV mandate. Consultations have been conducted with stakeholders to enhance regulations governing greenhouse gas emissions from passenger vehicles and light trucks, known as tailpipe emission rules.
The proposed change mirrors the approach taken by the European Union last year, where they opted to shift away from sales targets in favor of fuel efficiency standards.
Under the current EV mandate, manufacturers could earn credits by producing electric vehicles. The new system being considered will still allow manufacturers to earn credits through electric vehicle production, with provisions for carrying over credits from the old system.
The specific timeline for implementing the new system and its potential impact on emission reductions remain unclear. Former environment minister Steven Guilbeault has expressed openness to modifications in the EV mandate but emphasized the importance of maintaining such requirements for environmental and health benefits.
Reports suggest that incentives for consumers purchasing electric vehicles will be reintroduced, with potential rebates up to $5,000 for EVs priced at $50,000 or less. Additionally, funding is expected to be allocated for expanding EV charging infrastructure nationwide.
Ahead of the official announcement, stakeholders in the industry have expressed mixed reactions. Brian Kingston, representing major automakers in North America, welcomed the potential change, citing relief from redundant costs. Clean Energy Canada’s Joanna Kyriazis acknowledged concerns about the removal of the EV mandate but highlighted the transformative potential of well-designed vehicle efficiency standards.
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, is keen to see if the automotive strategy will help retain operations in Canada amidst challenges posed by U.S. trade policies.
Cabinet ministers have teased the upcoming auto strategy but have not divulged specific details yet. Carney’s administration has been making significant policy shifts, including reconsidering environmental initiatives from the previous government.
Guilbeault’s resignation in response to certain policy decisions by Carney underscores the evolving landscape of environmental regulations under the current government.