Carney to scrap EV mandate for emissions reduction plan and incentive for cars under $50k

OTTAWA — Prime Minister Mark Carney will announce he is scrapping the controversial electric vehicle mandate implemented by his Liberal predecessor, replacing it with a 75 per cent tailpipe emissions reduction target by 2035 and a new purchase incentive for electric vehicles priced under $50,000.

Carney is expected to announce the details of the government’s new auto sector strategy this morning at a press conference in Vaughan, Ont. National Post obtained details from a provincial source briefed on the announcement beforehand.

According to the source, who was granted anonymity to discuss details of the plan before release, the Liberals will officially kill the increasingly unpopular 100 per cent zero-emission vehicle sales target by 2035, colloquially called the EV sales mandate. Most auto manufacturers and industry representatives as well Ontario Premier Doug Ford have called for the elimination of the Justin Trudeau-era policy, arguing it was an unrealistic timeline .

Instead, Carney is expected to announce a return to tailpipe emissions regulations which aim to reduce the amount of pollutant gases emitted by vehicles. The new regulations will require a 75 per cent reduction in tailpipe emissions for vehicles by 2035, with an aspirational target of 90 per cent by 2040. The new regulations will be reviewed in five years.

On top of that, the government will partially resume popular EV purchase incentives that expired after the original federal program ran out of money in 2024. This time, the government will offer purchase incentives ranging from $2,000 to $5,000, but only on vehicles with a price tag under $50,000 that are covered by a free-trade agreement with Canada.

That means that Chinese EVs that are expected to be imported to Canada under a new agreement with China lifting nearly all tariffs on 49,000 vehicles annually will not be eligible for the new incentive. Instead, it is most likely to apply mainly to vehicles from American manufacturers covered by the Canada-U.S.-Mexico free trade deal.

The government is also expected to announce $1.5 billion in new funding to help grow the EV charging network across the country.

The source said the strategy will also include billions in supports for Canadian vehicle and auto part manufacturers, such as $3 billion in new funding for auto parts manufacturers via the federal Strategic Response Fund. In addition, the government is expected to earmark $750 million in training supports for workers.

The prime minister is slated to announce the start of a consultation on an auto sector tariff remittance plan as Canada, the U.S. and Mexico begin a major review of CUSMA. The plan will look into ways to remit tariffs to vehicle and auto part manufacturers who are heavily impacted by the ongoing tariff war with the U.S. amid the uncertainty of what will come of the CUSMA review.

The strategy announced Thursday is a flagship policy for the Carney, who is working to pull Canada’s auto sector away from total dependence on the United States by attracting new investment from European and, increasingly, Asian manufacturers.

Last month, the prime minister visited China and announced Canada would drop its 100 per cent tariffs on Chinese EVs — considered by many analysts to be the cheapest and most technologically advanced in the world thanks to heavy government subsidies — on 49,000 vehicles this year and up to 70,000 within five years.

In exchange, Carney expects Chinese vehicle companies to invest in building up local manufacturing in Canada, including an auto plant within the next few years, he told reporters in Beijing.

More to come.

National Post

cnardi@postmedia.com

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