Prime Minister Mark Carney has announced a temporary delay in the implementation of Canada’s electric vehicle sales mandate. Originally slated to require 20% of new passenger vehicles to be zero-emission by 2026 — a policy introduced under former Prime Minister Justin Trudeau — the plan will now be waived to ease pressures on the automotive sector facing severe economic headwinds from U.S. tariffs.
Carney, who made the announcement on September 5, stressed the urgency of the move at a press conference, saying “We have an auto sector that because of the massive change in U.S. trade policy is under extreme pressure. We recognize that.”
Economic relief measures unfold
In tandem with the EV mandate pause, the federal government unveiled a package of measures designed to help offset the impact of U.S. tariffs. A 60-day review of the EV policy is underway to assess its future viability and to explore ways to reduce costs for industry and consumers alike. Ottawa also announced a $5 billion relief fund to provide flexible support to companies across a range of sectors hit hardest by tariff hikes.
Farmers will see targeted assistance as well, with a $370 million biofuel production incentive aimed at supporting agricultural producers while simultaneously advancing clean fuel development. In addition, the government has introduced “Buy Canadian” procurement rules, which give preference to domestic suppliers in federal contracts — an attempt to strengthen Canadian industries and reduce reliance on vulnerable supply chains.
Industry voices: Cautious optimism and concerns
Reaction from the automotive sector has been cautiously optimistic. The Canadian Vehicle Manufacturers’ Association described the pause as a necessary reprieve from what many in the industry viewed as an unrealistic sales target. Industry leaders stressed that sluggish consumer adoption of EVs, coupled with rising costs and shifting global trade rules, made the original mandate difficult to achieve.
Flavio Volpe, president of the Automotive Parts Manufacturers Association, offered a blunt assessment of the policy environment, telling the Associated Press, “the White House has turned on the industry” and added, “I’m glad that we punted.”
Environmental backlash and political fallout
Environmental groups reacted with frustration, accusing the government of walking back climate commitments. Keith Stewart of Greenpeace Canada criticized the move directly to CBC, asking, “What was the point of electing Mark Carney when we get Pierre Poilievre’s climate policy?" Rick Smith, president of the Canadian Climate Institute, described the delay as a “missed opportunity” that injects uncertainty into the country’s climate strategy.
The opposition also seized on the pause. Conservative leader Pierre Poilievre characterized the decision as a “clumsy retreat,” at a press conference, warning that investors might delay their plans “while Mark Carney dithers for another year.”
Tesla and credit dynamics
Earlier in the summer, debate over the EV mandate highlighted concerns about market distortions. Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers’ Association (CVMA), pointed to Tesla’s financial gains under existing policies, noting that the company earned over US$400 million in regulatory credits in the first quarter of 2025 alone, according to Politico. Critics argued that the structure of the mandate disproportionately benefited Tesla at the expense of other automakers still scaling up their EV production capacity.
Consumer demand trends also raised questions about the mandate’s feasibility. EV sales accounted for only 8.7% of new vehicle sales in May 2025, with projections suggesting the figure would hover just under 10% for the full year. As Politico reported, many in the industry described the government’s original 20% target as “unfeasible.”
Carney’s shifting environmental policy
The EV mandate pause is not an isolated move, but instead, part of a broader recalibration of Canada’s climate policies under Mark Carney’s leadership. In April 2025, the government removed the consumer-facing portion of the carbon pricing mechanism, citing political divisiveness and affordability concerns. Around the same time, the Liberals passed tax legislation reducing the bottom marginal income tax rate and temporarily eliminating the GST for first-time homebuyers, underscoring a pivot toward affordability and economic stabilization.
Canadian consumers take note
This pause creates added uncertainty around pricing, incentives and supply, ultimately giving pause to consumers and investors with their eyes on EVs. Ottawa’s federal EV rebate program has faced funding pressures in recent months, and while Environment Minister Julie Dabrusin has suggested a revised program could be reintroduced to enhance affordability, no firm details have been released. In the short term, this means buyers may face higher upfront costs without clear federal support to offset them.
Industry experts caution that availability may also tighten, since automakers now face less regulatory pressure to prioritize EV shipments to Canada. This could leave consumers waiting longer for deliveries or facing fewer choices on dealer lots. At the same time, global automakers continue to expand EV production, which means the variety of models available will grow in the coming years, regardless of federal mandates.
If you’re in the market for an EV, carefully compare total ownership costs before making a purchase. Prospective buyers should weigh potential savings on fuel and maintenance against the higher upfront costs. Leasing an EV rather than purchasing outright could provide flexibility, especially while policies remain in flux. Additionally, consumers should keep monitoring provincial incentive programs, such as those in Quebec and British Columbia, as these may offer thousands of dollars in additional support even if federal rebates lag behind.
Sources
1. Associated Press: Canada’s Carney to delay EV mandate as country deals with Trump’s tariffs, by Rob Gillies (September 5, 2025)
2. CBC News: Canada delaying plan to force automakers to hit EVs sales targets, by Catharine Tunney and Michael Woods (September 5, 2025)
3. Politico: Elon Musk faces a new threat in Canada, by Mike Blanchfield (July 10, 2025)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.