Prime Minister Mark Carney on Thursday announced a new program to give rebates to Canadians who buy electric and plug-in hybrid electric vehicles as part of a five-point plan to “transform” the Canadian auto sector.
Carney says he will also repeal the electric vehicle mandate and put in place new emissions standards.
Speaking in the Greater Toronto Area, Carney said the program, which he called the Electric Vehicle Affordability Program, will include $2.3 billion in funding for these purchases.
Carney said Canadians who purchase or lease a battery-electric or fuel cell electric vehicle will receive up to $5,000 and up to $2,500 for plug-in hybrids priced up to $50,000.
“To support the Canadian auto industry, this $50,000 cap will not apply to Canadian-made EVs and plug-in hybrids,” Carney said.
“And these incentives will only apply to vehicles produced in countries with whom Canada has a free trade agreement.”
Carney said the five-point plan, which includes major spending on electric vehicle charging infrastructure and tax credits to incentivize domestic production, “will shape the future of mobility and advance manufacturing in Canada as part of the co-ordinated plan to build a stronger, more competitive, more independent country.”
Canada’s automotive sector currently faces steep tariffs of 25 per cent from U.S. President Donald Trump and the president has threatened further tariffs on “all goods” from Canada over a trade deal with China.
What will the new standards be?
Carney said Ottawa’s plans to “transform” the auto sector amid the ongoing trade war with the U.S. rest on five key pillars, which include updating national policies on emissions reduction “to focus on outcomes,” including by driving up electric vehicle sales in Canada through these incentives.
“We won’t stop there. By leveraging new investments in EV production, consumer incentives and charging infrastructure, we’ll work towards achieving the equivalent of a 90 per cent EV adoption rate by 2040.”
This comes after Carney, in September, announced Ottawa was pausing plans to impose minimum EV sales requirements on car companies for 2026 model years and said the government would launch a 60-day review of the current EV mandate program.
Get breaking National news
On Thursday, Carney said these new measures will enable the government to effectively replace the previous EV mandate.
“The more stringent emissions standards will enable the Government of Canada to repeal the electric vehicle accessibility standard, so-called EVAS. Replacing EVAS with those stronger vehicle emission standards focuses on the results that matter to Canadians, while avoiding placing undue burdens on the Canadian auto industry,” said Carney.
“This approach allows manufacturers to use a wide range of technologies to meet the standards and to respond to consumer preferences in the near term.”
The Canadian auto industry has been critical of the previous mandates, which they say were not aligned with the demands of consumers, with data showing a drop in EV sales among Canadians in recent years.
Tax incentives for industry to build more
Carney vowed to make it more attractive for businesses to invest in these strategies by offering tax breaks.
“We’re also implementing the most comprehensive investment incentives for the auto value chain anywhere in the world. The new productivity super deduction will reduce Canada’s marginal effective tax rate on investment to 13 per cent. That’s more than four percentage points lower than in the United States,” said Carney.
“It means businesses can immediately expense 100 per cent of their investments in manufacturing machinery, in equipment, in buildings, in zero emission vehicles, in clean energy equipment, in scientific research and development and productivity-enhancing assets, including patents, data network infrastructure, computers and beyond.”
Carney also said the government will introduce new and expand several currently available tax incentive programs “to accelerate investment across the low-carbon mobility value chain,” although no specific numbers were immediately provided.
“We’re implementing the Clean Electricity Investment tax credit. We’re expanding the Clean Technology Manufacturing Investment tax credit, and we’re including a wide range of critical minerals.
“And we are reducing the tax rate for zero-emission technology manufacturers so they benefit from one half of the normal corporate tax rate. And that is before these deductions. Put simply, we’re making Canada the best place to invest, the best place to build, the best place to build green.”
Expanding charging station infrastructure
In the same way gas-powered vehicles need gas stations, boosting electric vehicle sales in Canada will also require increasing the number of charging stations.
Carney on Thursday announced these new measures will include more than a billion dollars in spending to expand Canada’s charging station infrastructure.
“We’re also going to make it easier and more convenient for Canadians to charge their EVs. Because too many Canadians worry about being able to reliably get charging on journeys, especially in rural and northern communities,” said Carney.
More electric vehicles and more charging stations are also expected to increase demand for electricity, and Carney said Thursday details will be announced “in the coming weeks.”
What are the reactions?
Several industry and business members, as well as members of Parliament, have shared their thoughts on what Carney outlined and what needs to happen next.
David Adams, president and CEO of Global Automakers of Canada, responded to Thursday’s automotive strategy.
“We are pleased that the government has provided greater clarity on issues such as the Electric Vehicle Availability Standard, the reinstatement of EV incentives, and a commitment to aggressively build out the charging infrastructure,” he said.
“These are issues for which we have long sought direction from government and should give Canadians more choice, improve affordability and make electrified vehicles more accessible.
The Canadian Chamber of Commerce said it helped “restore confidence.”
“Businesses have been clear that rigid sales mandates and policy uncertainty risk slowing investment and undermining Canada’s position in the North American auto sector,” said Matthew Holmes, executive vice-president and chief of public policy at the Canadian Chamber of Commerce, in a written statement.
“A more flexible, market-responsive strategy is critical for attracting investment, supporting jobs and incentivizing manufacturers operating in Canada.”
Conservative Leader Pierre Poilievre spoke in the House of Commons Thursday after the announcement.
“The American president will continue to tariff Canadian-made automobiles going into the U.S. while Canadian taxpayers will be forced to subsidize American vehicles coming back into Canada,” said Poilievre.
“Instead of subsidizing American vehicles and killing Canadian jobs, why not take our plan to take the GST off Canadian-made automobiles?”
Member of Parliament Patrick Bonin of the Bloc Québécois said in French that it’s “good news” that the consumer incentives were announced Thursday.
“The Liberals should never have cancelled the incentives for the purchase of EVs, so it’s good news that they are being reinstated for vehicles manufactured here or in countries with which we have free trade agreements like Europe,” said Bonin.
“But the problem is that the federal government is blocking affordable EVs from Europe. Ottawa has decided that these cars, which are good for everyone else on the planet, are not good enough for Canada. Will the government offer people a choice by allowing European electric cars?”
Comments