Last week Prime Minister Mark Carney kicked the can down the road on electric vehicles, but said – without offering real details – that his government will, “advance new options to bring more, and more affordable, electric vehicles to Canadians.”
In response to a reporter’s questions at the press conference last week, Mr. Carney said his government will be looking at, “the interaction between the EV mandate, our clean fuel standards, our investment tax credits, our trade policy, all of those elements.”
Speaking with auto industry insiders, several options appear to be under consideration, including dropping or lowering tariffs on Chinese-made EVs, restarting the $5,000 consumer EV rebate program, tweaking the EV sales mandate, and/or opening the door to allow the sale in Canada of vehicles that pass European safety standards.
Of those options, opening the door to European-homologated vehicles might just be the best choice. It’s a dark-horse option and I won’t pretend it’s a one-stop solution to getting more electric cars on the road and reducing emissions, but it could certainly achieve the stated goal of bringing more EVs into Canadian showrooms.
Several brands that have Canadian dealerships already make (somewhat) affordable EVs and PHEVs in Europe that could work here, including the subcompact Jeep Avenger EV and PHEV, the Fiat Grande Panda and 600 and the tiny Hyundai Inster. (There is also a whole world of interesting hybrids, such as the Dacia Duster SUV and Hyundai Azera sedan, but I won’t go down that rabbit hole just yet.)
Cars such as those are currently denied to Canadians, primarily because Americans dictate which cars do and don’t wind up in Canadian dealerships.
The beauty of opening up the Canadian market to cars approved in Europe is that, not only could it bring in a long list of previously unavailable compact EVs and PHEVs, but it doesn’t come with all the political baggage and high cost of other options. It would also extend an olive branch to Germany and the rest of Europe at a time when Canada is looking for new trading partners.
Besides, Carney must do something to deliver “more, and more affordable,” EVs to Canadians, because his other big automotive announcement last week did exactly the opposite.
He said the government is removing the 20-per-cent minimum sales requirement for electric and plug-in hybrid vehicles (PHEVs) for 2026, and promising to review the EV availability mandate.
Pausing the mandate is a decision that automakers applauded, one they’ve been pushing for and one that was sadly necessary given how the federal government haphazardly pulled the plug on the $5,000 consumer iZEV incentive in January, months earlier than expected.
Without that $5,000 discount, combined sales of PHEVs and EVs tumbled back down to 8.6 per cent of the new vehicle market in the second quarter of this year, compared to 14.6 per cent in all of 2024, according to Statistics Canada. Quebec and B.C. also paused their own incentive programs earlier this year and, while Quebec’s has since returned, sales have slowed.
This on-again, off-again rebate mess was entirely avoidable, but the damage is done.
The timing couldn’t have been worse, as it made the 2026 target seem totally unattainable.
Carney explained the move “provides immediately financial relief to automakers.” But what about drivers?
If the mandate is ultimately scrapped, it would take the pressure off automakers to deliver affordable EVs. And if automakers aren’t under pressure to deliver low-priced EVs and build out charging infrastructure, it makes little sense to then throw the auto industry another bone by restarting the $5,000 federal incentive program.
The policy would be all carrots and no sticks for the auto industry. The incentive only makes sense if there’s a sales mandate, which is under review at the moment.
Alternatively, dropping the current 100-per-cent tariff on Chinese EVs would surely produce an influx of affordable EVs, but it means stepping into a political minefield between the U.S. and China, and also undermining Canada’s struggling auto manufacturing sector.
It risks crushing our EV-manufacturing ambitions before they even really get off the ground, closing the door on a valuable green industry with long-term growth potential.
Scrapping the tariff would likely help struggling canola farmers, who China have slapped with crippling tariffs, at the cost of our auto industry. Finding some middle ground for Chinese auto tariffs and deescalating that trade war risks escalating the trade war with our southern neighbours.
In context of all these other options for getting more, and more affordable, EVs into the hands of Canadian drivers, simply allowing in new vehicles deemed safe enough for European roads seems like an easy win for both Carney and Canadian drivers.
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