Canada’s auto strategy targets 90% EV sales by 2040

The Canadian government has announced a new automotive strategy combining industrial investment, revised emissions standards, consumer EV incentives, and trade measures designed to reduce the sector’s dependence on US export markets and fossil-fuel vehicle production. The package, announced by Prime Minister Mark Carney on 5 February, targets 75% EV sales by 2035 and 90% by 2040 through tightened greenhouse gas (GHG) emission standards for model years 2027–32.

The strategy allocates CA$3bn from the Strategic Response Fund and up to CA$100m from the Regional Tariff Response Initiative to support industry adaptation and market diversification. A five-year, CA$2.3bn EV Affordability Program will offer purchase or lease incentives of up to CA$5,000 for battery-electric and fuel cell EVs and up to CA$2,500 for plug-in hybrid electric vehicles (PHEVs), capped at a final transaction value of CA$50,000 for vehicles from free-trade-agreement countries — a cap that will not apply to Canadian-made models. A further CA$1.5bn has been allocated for EV charging and hydrogen refuelling infrastructure through the Canada Infrastructure Bank.

On trade, the government will maintain counter-tariffs on US auto imports and strengthen its automotive remission framework to favour domestic production. It has signed a memorandum of understanding (MOU) with South Korea on future mobility collaboration and announced a new strategic partnership with China, which will allow a fixed volume of Chinese EV imports into Canada and seek to attract Chinese joint venture investment in the sector.

A CA$570m workforce investment will fund reskilling support for up to 66,000 workers, alongside a new work-sharing grant to reduce layoffs during the transition period.

Source: Government of Canada