Canada Scrapping National EV Sales Mandate

Canadian Prime Minister Mark Carney said on Wednesday his government was scrapping a national electric vehicle mandate, marking another retreat from climate measures after previously dropping both an emissions cap on the oil and gas sector and regulations for clean electricity.

In 2023, under then-Prime Minister Justin Trudeau, Ottawa had mandated that 20% of all vehicles sold in 2026 be emissions-free. The push was unpopular with vehicle manufacturers, who said it imposed unsustainable costs, and looked vulnerable when the new U.S. administration cut support for EVs.

Canada will introduce stronger emissions standards for 2027-2032 model years, which it says will help achieve a goal of 75% EV sales by 2035 and 90% EV sales by 2040.

Changes Avoid Burdens on Auto Sector: PM

Replacing the EV sales mandate with stronger vehicle emissions standards “focuses on the results that matter to Canadians, while avoiding undue burdens on the Canadian auto industry,” Carney said at a press briefing.

Carney said he still considered Canada to be “a leader on climate change,” noting the country would release its climate competitiveness strategy in the coming weeks.

But Sam Hersh of the advocacy group, Environmental Defence, called the new EV strategy “a huge setback.”

“This may be framed as short-term relief for automakers, but it will lead to long-term pain and put the industry on an inevitable path to decline,” Hersh said.

Ontario Premier Doug Ford welcomed the new auto strategy, calling it a “pivotal” moment as the country’s economy and sovereignty are under attack by U.S. President Donald Trump.

“I’m pleased to see the federal government take the important step of ending its mandate, helping our auto sector compete and protect auto jobs,” he said in a statement.

The advocacy group Consumer Choice Center also applauded Carney’s EV announcement, saying “it was always wrong for the government to try to dictate to Canadians what type of car they ought to buy.”

Canada Follows Europe

The move follows a similar strategy adopted by the European Commission in December, when the 27-member bloc agreed to drop its ban on new combustion-engine cars from 2035.

Carney, citing the damage U.S. tariffs have done to the highly integrated North American auto sector, is pressing the country to diversify its trade and boost domestic manufacturing.

Last November, the federal government scrapped a planned emissions cap on the oil and gas sector and dropped rules on clean electricity, moves designed to spur investment in energy production.

Carney’s government is also launching a new C$2.3 billion ($1.68 billion) program offering incentives of up to C$5,000 for EVs made by countries Canada has free-trade agreements with. Canada is promising C$1.5 billion to improve the national charging network.

Canada will maintain counter-tariffs on auto imports from the United States and is looking at ways to encourage Canada-based manufacturers to boost production and investment.

Last month, Carney struck an initial trade deal with China to slash tariffs on EVs. Canada will allow up to 49,000 Chinese EVs at a tariff of 6.1% on most-favored-nation terms, with the quota set to gradually increase to about 70,000 in five years.

Carney said Chinese EVs would not be eligible for government incentives.

($1 = 1.3679 Canadian dollars)

(Reporting by Ljunggren, Cheng and Psaledakis; Editing by Rod Nickel)