OTTAWA—Rick Smith, President of the Canadian Climate Institute, made the following statement about the federal government’s new automotive strategy:
“The new auto strategy announced today is a positive step toward a more affordable future powered by clean electricity. By replacing electric vehicle (EV) sales targets with updated tailpipe regulations, investing in new EV charging infrastructure, spurring new investment in auto manufacturing and innovation, and launching new consumer EV purchase incentives, the new federal strategy aims to reduce transportation emissions and strengthen Canada’s auto sector, while making it easier and more affordable for people and businesses to go electric.
“Whether this policy package ultimately delivers cost-effective climate benefits and leads to more high-quality, affordable electric vehicles in Canadians’ garages will be determined by how—and how quickly—these policies are finalized and implemented. For instance, while the improved vehicle efficiency standards provide manufacturers with greater compliance flexibility, they don’t guarantee more EVs will be available to Canadians.
“This strategy aims to accelerate investment in Canadian manufacturing of EVs and batteries, with over $3 billion in support and investment incentives throughout the value chain to help Canada’s auto sector diversify, innovate and compete in the rapidly changing trade environment. With EVs making up more than a quarter of vehicles sold globally last year, strategic investments to expand Canadian production of EV components and vehicles will help the auto sector seize a critical growth opportunity in response to U.S. tariffs and trade disruption.
“Targeted consumer purchase incentives are a proven way to spur EV sales: data shows that every $1,000 drop in price increases EV demand by more than 11 per cent nationally. The $2.3 billion EV Affordability Program takes a cost-effective and equitable approach by limiting incentives to models costing under $50,000 unless they’re made in Canada.
“To complement the new consumer incentives, the government should also continue pursuing agreements, like the recent EV import deal with China, to ensure more affordable options are available at dealerships across Canada. While there are currently more than 20 EV models selling for under C$40,000 in Europe, only one of them is available in Canada.
“Shifting away from sales targets to stronger tailpipe emissions standards echoes the approach taken in other major markets like the European Union. If this approach delivers emissions results equivalent to a 75 per cent EV sales target by 2035, it would be less than what was expected under the electric vehicle availability standard, but offers a path forward for steady, ongoing incentives for lower-emissions vehicles and more electric-powered vehicles. We look forward to examining the proposed regulation in detail to verify if this is a credible outcome and approach.
“Electric vehicles are picking up speed in markets around the world because of their superior technology and consumer benefits—but because of confusing and shifting policy signals, Canada is virtually alone in the world in seeing EV adoption flag recently. The federal government should move quickly to implement this new strategy, and ensure the details of how the policy and regulations are designed deliver the results promised.”
QUICK FACTS
- More than one in four cars sold globally was electric in 2025, according to global energy think tank Ember.
- Electric vehicle sales in Canada grew at a staggering annual rate of 45 per cent between 2017 and 2024, increasing more than thirteenfold.
- Following the removal of federal and provincial consumer incentives, EV market share in Canada fell from 15 per cent in 2024 to 9 per cent in the first three quarters of 2025.
- Passenger transport is the second highest-emitting sub-sector in Canada, making up 13 per cent of Canada’s national emissions or nearly 94,000 tonnes of emissions in 2024.
RESOURCES
- Insight | What is driving electric vehicle sales in Canada?
- Insight | Gas-powered vehicle sales have peaked in Canada
- Insight | Why are Canada’s passenger vehicle emissions stuck in neutral?
- Insight | EV charging infrastructure is spreading rapidly across Canada
MEDIA CONTACTS
Claudine Brulé (Eastern Time)
(226) 212-9883
cbrule@climateinstitute.ca
Krystal Northey (Mountain Time)
(226) 212-9883
knorthey@climateinstitute.ca
ABOUT US
The Canadian Climate Institute is Canada’s leading climate change policy research organization. We produce rigorous analysis, economic modelling, and in-depth research, and have experts available to comment on topics including: carbon pricing, the costs of climate-related disasters in Canada, and Canada’s progress in reducing emissions, and policy priorities for the incoming federal government.
