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Feds to reveal future of EV mandate in 2026, as Liberals urged to relent on 100% target
OTTAWA — As Prime Minister Mark Carney ushers in a new era of climate policy for the Liberals, a key decision is hanging over the governing party’s approach to electric vehicles.
Namely, will the 2035 sales mandate be kept or outright repealed?
The regulation currently requires manufacturers to hit certain sales targets for zero-emission vehicles, with those targets progressively rising until all new vehicle sales are zero emissions by 2035.
Keean Nembhard, a spokesman for Environment Minister Julie Dabrusin, said in a statement that “we will have more to share in the new year,” regarding the results of the 60-day review and the future of its zero-emission vehicle policy.
That timeline is beyond what some in the industry had expected, as automakers seek clarity on the regulation they spent this year urging Carney to repeal, citing the plummeting sales of electric vehicles and the ongoing Canada-U.S. trade war, where the auto industry has found itself on the frontlines.
“We’re very disappointed that there has not been a decision communicated to the auto industry, and we’ve been urging the federal government and the prime minister to move quickly on this and make a decision,” said Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers’ Association, which represents Ford, General Motors, and Stellantis.
The Liberals’ Nov. 4 budget stated that the government would “announce next steps on electric vehicles in the coming weeks.”
The government now expects that to happen early next year, as it works through changes to the policy.
Carney launched a 60-day review of the policy back in September, pausing the requirement for 2026, which would have mandated that 20 per cent of new vehicle sales be zero-emission.
The review was launched amid concerns that hitting that target was unrealistic. Kingston, who, along with auto CEOs, met with Carney over the summer, warns that to comply, manufacturers would have to spend “billions” on purchasing credits from other electric-vehicle makers, such as Tesla, or restrict the sales of gas-powered and hybrid vehicles.
“Companies are making decisions about production and inventory for the 2027 model year. And the longer that this goes on and this uncertainty hangs out there, the more damage and cost is put on the industry,” he said.
Manufacturers can also comply by spending money to build out charging infrastructure.
While automakers say the Liberals ought to scrap the policy, other stakeholders have urged the government to maintain the rule, but with changes, such as dropping the target that all new vehicle sales must be zero-emission by 2035.
Electric Mobility Canada, a national association representing the electric transportation industry, wrote in its submission as part of the government’s review that it should “eliminate” the 100 per cent target, “to remove a political flashpoint that is not necessary to maintain momentum in the transition.”
Clean Energy Canada, a think-tank based out of Simon Fraser University, recommended the same, instead suggesting the government lower the 2035 target to between 90 to 95 per cent.
“Reducing the (100 per cent) target could enhance public support by removing the perceived ‘ban’ on gas-powered vehicles and offer options for ‘hard-to-electrify’ jurisdictions, while still achieving significant emission reductions and improving (electric vehicle) affordability and availability,” it wrote in its submission.
Both British Columbia and Quebec, two provinces with their own sales mandates, revised their own policies to remove the 100 per cent target by 2035, with Quebec lowering it to 90 per cent, and B.C. stating it wanted to align its provincial policy with whatever the federal government releases.
Quebec also relaxed requirements for what counted as a zero-emission vehicle, including on its list non-plug-in hybrid vehicles, which have smaller batteries. The federal definition only includes plug-in battery hybrids and fully electric vehicles or ones powered by hydrogen fuel cells.
Opposition Conservative Leader Pierre Poilievre has been one of the most vocal critics of the federal policy, arguing that it amounts to a “ban on gas vehicles” and an affront to rural living, where driving remains essential.
Nembhard said the government received “considerable input from stakeholders, provinces and territories and Indigenous organizations” during the course of its 60-day review, which he said was launched to address “changes in tariffs and trade, economic uncertainty and shifts in the automotive industry.”
“Its aim was to ensure (Electric Vehicle Availability Standard) continues to reflect market realities, remains effective for Canadians, and does not place undue burden on automakers.”
Rachel Doran, executive director of Clean Energy Canada, said she believes the most important thing is that Canada makes policy choices that guarantee “affordable (electric vehicles) are available to Canadians.”
“And I will say right now, that is not the case.”
Doran points to moves like the federal government’s decision to suspend the purchase rebates for electric vehicles earlier this year, as well as the levying of a 100 per cent tariff on Chinese-made electric vehicles, which are cheaper to purchase.
The latter remains a must to maintain, say leaders in Canada’s auto industry, who say it is not only essential that Canada stay aligned with the U.S., which first took the step under former U.S. president Joe Biden, given how integrated the two auto markets are, but also to protect the domestic industry against unfair advantages of competing against these vehicles, which Beijing has heavily subsidized and produced using less rigorous labour practices.
Doran nevertheless points to examples like the European Union, where more affordable models of electric vehicles remain available, including from Japanese and South Korean automakers.
“So we really do have kind of a problem here that needs to be solved.”
Despite campaigning on plans to reintroduce a purchase incentive, Carney’s government has yet to do so.
An internal briefing note, signed by officials within Transport Canada last December as the government prepared to announce a pause on the rebate program, which was released to National Post under federal access-to-information legislation, warned that ending the program was expected to be met with “strong criticism from industry, environmental organizations, consumers and other levels of government.”
Officials stated that around $2.9 billion had been spent on the incentive program since it was launched back in 2019 and that, as of November 2024, it had helped Canadians buy or lease more than 519,000 zero-emission vehicles and grow its market share.
Automakers and environmental advocates alike have blamed the ending of the program, which the federal government announced back in January, because it had run out of its allotted money, for the dramatic drop in sales.
Rick Smith, executive director of the Canadian Climate Institute, another think-tank, said scrapping the mandate altogether would “grind to a halt decarbonization in the transportation sector.”
Next to the oil and gas sector, the transportation sector remains the second-highest source of greenhouse gas emissions.
Smith said the regulation, which the institute supports, is only part of the overall policy picture he believes the federal government must fulfil to make it easier for Canadians to make the switch to electric vehicles.
“Our hope is, in the new year, that the federal government make good on its commitments to bringing back purchase subsidies,” Smith said, adding it also needs to boost the building of public charging infrastructure.
With files from The Canadian Press
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