EVs ready to be loaded and exported from China's Yantai port on Jan.10, 2024.-/AFP/Getty Images
Romel Mostafa is an assistant professor of business, economics and public policy, and director of the Lawrence National Centre for Policy and Management, at the Ivey Business School at Western University.
Gal Raz is an associate professor of operations management and sustainability at Ivey Business School.
Canada’s new auto strategy, unveiled on Thursday, marks a quiet but consequential shift in how Ottawa thinks about electric vehicles, with the federal government returning to the fundamentals that can potentially drive adoption, investment and competitiveness. The risk now lies less in direction than in execution.
A key pillar of the Prime Minister’s new auto strategy is its renewed emphasis on demand‑side policy levers to accelerate EV adoption – a clear departure from current U.S. policy. That is commendable.
Our research outlining experiences from leading EV‑adopting countries shows that mass uptake hinges on two conditions: the availability of reliable, convenient charging infrastructure and a meaningful narrowing of the price gap between EV and internal‑combustion alternatives. When policies support these conditions and push EV sales beyond a critical threshold, adoption accelerates rapidly along an S‑curve, driven by peer effects and network spillovers.
However, private investment in charging infrastructure is constrained by a classic chicken‑and‑egg problem: Consumers delay EV purchases without chargers, while investors delay charger deployment without sufficient EV demand, trapping markets below the adoption tipping point.
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We therefore welcome Thursday’s announcement of investment in fast‑charging networks facilitated by the Canada Infrastructure Bank – an approach we previously recommended – to help break this coordination failure. Canada needs to close a large charging gap: an estimated requirement of roughly 250,000 ports by 2035, up from about 34,000 in 2025.
By contrast, evidence from jurisdictions with strong supply-side mandates but limited progress on affordability and charging shows that such mandates alone are neither necessary nor sufficient to tip the market. Ottawa’s replacing of the EV mandate with stronger emissions targets is a pragmatic, evidence‑based shift.
Accelerating EV adoption in Canada also matters for a more strategic reason: supporting the proposed large manufacturing investments our governments have committed to building a vehicle and battery ecosystem, some of which are now stalled. This imperative is heightened by policy reversals in the United States, where the current administration has scaled back support for EV incentives and charging infrastructure.
Globally, major auto markets continue to move toward electrification, albeit unevenly. Underlying Canada’s strategy is therefore a temporal bet: While the U.S. may lag in the near term, North American demand is likely to converge over the long run with global trends as EV costs continue to fall with technological progress.
In the interim, Canada has both an opportunity and a need to move faster on electrifying its auto market to anchor production, scale capacity and build supply chains. Doing so would allow Canada to leverage longstanding strengths in automotive components and skilled labour, while extending competitiveness upstream into batteries and critical minerals – positioning the country more securely in the next phase of the global auto industry.
For this strategy to succeed, several stars have to be aligned. Removing U.S. tariffs on finished vehicles, steel, and aluminum should remain a top priority – not only to support existing exports of ICE and hybrid vehicles, but also new EVs. Even if U.S. EV adoption grows slowly in the near term, the market remains large and indispensable.
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Canada should also make a concerted effort to encourage U.S. manufacturers to revisit and expand their Canadian investment plans, particularly for EV production. These firms remain major buyers of Canadian auto parts and allying with them will be critical in our negotiations for the United States-Canada-Mexico Agreement.
On the critical minerals side, Canada must accelerate development and processing s to establish upstream EV value chains – an area where speed will increasingly differentiate Canada’s manufacturing proposition.
Meanwhile, many of Canada’s more than 700 auto‑parts suppliers remain tied to traditional auto production. Supporting their transition – either toward EV technologies or adjacent sectors such as defence – will require a clear strategic plan that has yet to be articulated and acted upon.
On the demand side, charging deployment must accelerate in multi‑unit residential and commercial settings, while rural and remote regions will require tailored solutions.
For decades, Canada’s auto‑industry and market policies moved largely in lockstep with the United States, reflecting deeply integrated supply chains and shared trade frameworks. Yet the results are sobering: Canadian vehicle production has fallen to about 1.2 million in 2025, from roughly 2.3 million units in 2016. In today’s environment of trade disputes and shifting U.S. policy, simply following Washington’s lead risks further erosion of both vehicle and component production in Canada.