The federal government is expected to announce a sweeping reset of Canada’s automotive policy on Thursday, signalling the end of the country’s electric vehicle sales mandate and the introduction of a new system focused on fuel efficiency standards and credits.
According to sources familiar with the plan, the national automotive strategy will formally abandon the incremental targets that required 60 per cent of new vehicle sales to be electric by 2030 and 100 per cent by 2035. In its place, Ottawa will roll out a framework that pressures automakers to reduce emissions through tighter efficiency rules, while still rewarding electric vehicle production through a credit-based system.
Pressure From Industry and Provinces
Prime Minister Mark Carney has faced sustained pressure from automakers, several provincial governments, and the Conservative Party to walk back the mandate. Industry leaders argued that the policy imposed added costs at a time when manufacturers are already grappling with U.S. tariffs, supply chain disruptions, and slowing demand.
Carney paused the 2026 targets last September and ordered a 60-day review, saying the auto sector had “enough on its plate.” Since then, consultations have focused on Canada’s tailpipe emission rules, which govern how much pollution passenger vehicles and light trucks can emit.
Sources say those consultations paved the way for Thursday’s announcement.
How the New System Will Work
Under the new approach, automakers will be required to meet stricter fuel efficiency and emissions benchmarks across their fleets. Manufacturers will earn credits for producing electric vehicles and other low-emission models, and those credits can be traded or banked for future use.
Importantly, credits earned under the existing EV mandate will carry over into the new system, offering some continuity for companies that invested early in electrification. While the framework resembles reforms adopted by the European Union last year, it remains unclear whether it will deliver the same emissions reductions as a hard sales mandate.
EV Incentives Set to Return
Sources also confirm the return of federal consumer incentives for electric vehicles. The iZEV rebate program, which was suspended more than a year ago after running out of funds, is expected to be revived.
The government is likely to offer incentives of up to $5,000 for electric vehicles priced at $50,000 or less. Additional funding will be announced to expand Canada’s charging infrastructure, a key barrier to wider EV adoption.
Mixed Reactions From Stakeholders
Automakers welcomed the shift. Industry representatives say removing the mandate provides breathing room without abandoning the transition to cleaner vehicles entirely.
Clean energy advocates, however, are cautious. While some acknowledge that strong efficiency standards could be effective, they warn that delays or weak enforcement could undermine Canada’s climate goals.
Former environment minister Steven Guilbeault has said he supports adjustments but opposes scrapping the mandate outright, citing air quality, public health, and climate impacts.
A Broader Policy Reset
The move would mark another rollback of Trudeau-era environmental policies under Carney’s leadership. Since taking office, the prime minister has cut the consumer carbon tax, softened commitments on oil and gas emissions, and paused several climate regulations.
Thursday’s announcement will be closely watched for one key reason: whether it stabilizes Canada’s auto sector or accelerates investment south of the border. What this really means is that Canada is betting flexibility, not mandates, will keep its auto industry competitive in an increasingly volatile global market.
