Goodbye EV sales mandate, hello purchase rebates. Carney shakes up Canada's auto industry

Prime Minister Mark Carney is repealing Canada's electric vehicle mandate that required all new car sales to be electric in a decade, scrapping another Trudeau-era environmental policy. 

Instead, Carney is taking his own approach by introducing stronger greenhouse gas emission standards for vehicle models 2027-32 to encourage automakers to produce more zero-emission vehicles.

"Canada will set a new, more ambitious sovereign path to reduce automobile emissions," Carney said at a news conference at an auto parts manufacturer in the Greater Toronto Area.

"We're tightening by twofold our GHG emissions standards and we're giving the industry the flexibility how they achieve that, whether through plug-in hybrids, EVs, more efficient ICE [internal-combustion engine] vehicles."

The government is unveiling its new national automotive strategy aimed at protecting Canada's auto sector and jobs in the face U.S. President Donald Trump's desire to move vehicle production south. Ottawa is also trying to jump-start the country's battery-powered vehicle industry. 

Carney expects his new emissions system will lead to 75 per cent of new cars sold in Canada being electric by 2035 — an ambitious goal, but still less than the previous mandate that Carney is ditching.

Government officials said they haven't precisely calculated how much carbon pollution the new system will eliminate. But Carney said it was modelled based on "grams per mile."

"So it's a 57 per cent reduction in the emissions as this ramps up for the vehicles in the country," Carney said.

Carney announced the Liberal government is also launching a new $2.3-billion program to offer consumers and businesses purchase or lease incentives of up to $5,000 for EVs and up to $2,500 for plug-in hybrids. 

Plug-in vehicles must be under $50,000 to qualify and be made by countries Canada has free trade agreements with, which would exclude any vehicles made in China. The price cap will not apply to Canadian-made vehicles. 

In the past, Canada offered a popular rebate of up to $5,000 to consumers to help bring down the cost of plug-in vehicles, but the program ran out of money more than a year ago due to high demand.

The government also plans to find partnerships to build more EV charging stations across Canada.

"Wherever you live in Canada, charging your vehicle should be as simple as filling your gas tank," Carney said. 

Carney said the $1.5-billion fund is needed because "too many Canadians worry about being able to reliably get charging on journeys, especially in our rural and northern communities."