Canada Plans to Suspend Mandatory Electric Vehicle Sales Regulations

According to Bloomberg, Canada is delaying a plan that would require automakers to meet minimum electric vehicle sales standards by 2026. This is a concession to car manufacturers, as the Canadian automotive industry is already severely impacted by tariffs.

Sources indicate that the Canadian government will announce this decision as part of a series of assistance measures aimed at helping businesses in industries most severely affected by the U.S. trade war.

Image source: Government of Canada

Former Canadian Prime Minister Justin Trudeau had introduced relevant regulations requiring automakers to ensure that at least 20% of vehicle sales are zero-emission vehicles by the 2026 model year. However, according to sources, the Canadian government will no longer enforce this target. Instead, it will conduct an assessment of the so-called "electric vehicle supply standard" to ensure that the standard does not place a burden on automakers.

This move once again demonstrates that Mark Carney, who took office as Canada's Prime Minister earlier this year, is gradually abolishing some policies from the Trudeau era, partly due to the pressures of the trade war. Previously, the Carney administration had canceled several retaliatory tariffs on American products, abolished the carbon tax on consumer fossil fuel use, and abandoned plans to impose a new tax on digital services after Trump expressed dissatisfaction.

For months, the Canadian automotive industry has been lobbying the country's government to modify electric vehicle mandates, claiming that the related targets are unrealistic, will increase business costs, and threaten jobs.

In June this year, zero-emission vehicles accounted for about 8% of newly sold vehicles in Canada. Due to the Canadian federal government's termination of a consumer incentive program, which they stated had exhausted its funds, the sales proportion of zero-emission vehicles has declined this year. It is reported that the program used to offer up to 5,000 Canadian dollars (approximately 3,622 USD) in subsidies to purchasers of clean energy vehicles.

The electric vehicle standards established during Trudeau's administration set progressively increasing targets, requiring that by 2035, all new passenger cars and light trucks sold domestically in Canada must achieve zero emissions.

Brian Kingston, CEO of the Canadian Vehicle Manufacturers' Association, stated in an interview in August: "These targets are made up by the Canadian government out of thin air and are not based on a reasonable assessment of real market dynamics." It is reported that the association's members include General Motors, Ford, and Stellantis, and these companies all have production bases in Ontario, Canada.

Brian Kingston pointed out that under the Canadian government's mandatory electric vehicle requirements, manufacturers who fail to meet sales targets may be forced to restrict the sales of internal combustion engine vehicles or purchase carbon emission credits from companies like Tesla.

The Canadian automotive industry is highly integrated with the American automotive industry and is currently facing the threat of tariffs on foreign-made cars imposed by the Trump administration. Since the outbreak of the trade war, General Motors and Stellantis have both reduced production at their assembly plants in Ontario.

Automakers worldwide are facing cost increases due to U.S. tariffs, while electric vehicle manufacturers are encountering additional challenges— the U.S. is taking measures to weaken fuel efficiency regulations and eliminate consumer tax credits for purchasing electric vehicles.