Prime Minister Mark Carney announces a delay in Canada’s EV sales target amid rising U.S.
Canadian Prime Minister Mark Carney has recently announced a significant delay in putting into effect Canada’s planned electric vehicle (EV) sales mandate, which was initially scheduled to begin in 2026. This decision comes as a response to increasing pressure from U.S. tariffs that were implemented under President Donald Trump’s administration. The move highlights the growing worries within the automotive industry, as it deals with the combined impact of these tariffs and regulatory commitments that could potentially worsen the financial hardships faced by domestic automakers and suppliers.
The original mandate, the brainchild of former Prime Minister Justin Trudeau, stipulated that by 2026, 20% of all passenger cars sold in Canada should be zero-emission vehicles. The targets would become progressively stricter, leading up to an entire shift to electric and hybrid plug-in vehicles by 2035. This policy was part of a larger Canadian environmental plan aimed at lowering greenhouse gas emissions in transportation, dovetailing with the existing Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations.
That said, Carney’s government has acknowledged that Canada’s auto sector—an essential part of the country’s economy, directly and indirectly employing around 625,000 people—is under extraordinary strain right now. The industry faces tariffs of up to 50% on steel and aluminum, a 25% tariff on vehicle parts and finished cars, and other trade disruptions, despite protections under the U.S.-Mexico-Canada Agreement (USMCA). These measures have added up to billions of dollars in costs for Canadian automakers, impacting their liquidity and their ability to stay competitive globally.
Carney highlighted that the government understands these issues, saying, “We have an auto sector that, because of the huge changes in U.S. trade policy, is under intense pressure. The EV mandate just adds more to the liquidity problems they are already facing, the financial hurdles these producers have. They've got quite a lot on their plate right now, so we’re taking some of that off.” Industry groups like the Canadian Vehicle Manufacturers’ Association and the Automotive Parts Manufacturers Association welcomed this move, having pushed for the delay because they were concerned that the combined burden of tariffs and strict EV targets was just too much to handle.
As part of this response, the government is putting a hold on the 2026 EV sales requirement and conducting a 60-day review of the entire mandate program. This review will look into possible adjustments to the annual sales targets, including the long-term 2035 goal, and seek flexible approaches that could help lower costs and provide more stability for automakers. While Carney didn’t completely cancel the mandate, he stressed that this step is part of a broader climate and industrial competitiveness strategy designed to achieve meaningful emission reductions while supporting local industry.
To help soften the blow from tariffs and trade tensions, the federal government is also launching a C$5 billion strategic response fund, aimed at sectors hit hardest—like steel, automotive, and lumber. This initiative is part of a wider ‘Buy Canada’ campaign focused on strengthening domestic supply chains by prioritizing Canadian-made materials and labor for public projects. Additional measures include better employment insurance benefits and a C$370 million production incentive for canola farmers, who are dealing with retaliatory tariffs from China tied to disputes over agricultural and automotive trade.
The Canadian economy, meanwhile, has shown signs of strain. It shrank by 1.6% in the second quarter of 2025, and unemployment rose to 7.1%. These figures underscore just how urgent it is to manage trade shocks, all while trying to meet environmental goals.
On the market side, EV sales in Canada had been growing rapidly until recently. They reached nearly 18% of new vehicle sales during times when generous rebates were available. But when those incentives ended, sales dipped, and latest figures show EVs now make up about 8% of new sales as of mid-2025. Industry watchers are watching closely to see whether the new government support measures and revised targets will help stabilize and eventually boost consumer interest in electric cars.
All in all, Canada’s adjusted approach shows the difficult balancing act between protecting a key part of its industrial base and pushing forward on climate change policies, especially given the complicated geopolitical and economic landscape. The upcoming review is sure to be scrutinized by automotive stakeholders, environmental groups, and policy experts alike—everyone will be keen to see what direction Canada takes moving forward in the fast-changing global auto scene.
Source: Noah Wire Services
