The message from Canada’s automotive leaders couldn’t be clearer: Ottawa’s electric vehicle (EV) mandate is hurting competitiveness, pushing production away from Canada, and risking the very foundation of an industry that has long powered the nation’s economy.
When the heads of the Canadian Vehicle Manufacturers’ Association (CVMA) and the Canadian Automobile Dealers Association (CADA) appeared before MPs recently, they didn’t mince words. They want the federal government to end the EV mandate officially called the Electric Vehicle Availability Standard before more damage is done.
The regulation, introduced in 2023, requires that 20 percent of all new light-duty vehicles sold by 2026 must be zero-emission, climbing to 100 percent by 2035. On paper, it sounds ambitious a climate-forward plan designed to cut emissions and create green jobs. In reality, it’s turning into a bureaucratic straitjacket that’s squeezing manufacturers, dealers, and consumers alike.
Brian Kingston, president and CEO of the CVMA, told Parliament’s Industry Committee that the EV mandate is “prioritizing EV sales over the development of our North American EV supply chain.” That’s a polite way of saying Ottawa has put the cart before the horse. While the government pushes for more EVs on the road, the infrastructure, affordability, and production incentives simply aren’t keeping pace.
The situation is made worse by the ongoing 25 percent U.S. tariffs on vehicles and parts imported from Canada and Mexico. Kingston pointed out that while Canadian automakers are being hit with new costs at home, foreign competitors importing vehicles into Canada face none of the same penalties. “There’s little incentive remaining to build vehicles in Canada today,” he warned.
The numbers back him up. By the end of 2025, automakers will have paid more than US$10.6 billion in tariffs on vehicles imported from Canada and Mexico and that doesn’t even include rising costs of steel and aluminium. As Kingston put it, “It’s more cost-effective to manufacture a vehicle in Japan or Germany and export it to the U.S., as opposed to manufacturing in North America, for North America.”
It’s not just manufacturers who are sounding the alarm. Dealers, too, are feeling the pressure. Huw Williams of the CADA said the EV mandate has become “one of the major impediments that our dealers are worried about.” The government’s temporary pause on the 2026 model year requirement was a welcome move, he said, but it’s not enough. What the industry needs is certainty and the freedom to sell what consumers actually want and can afford.
Williams also called out another policy headache: the so-called “luxury tax.” Meant to target high-end vehicles, it’s now hitting tradespeople and small business owners who rely on work trucks priced just above the $100,000 mark. As Williams bluntly put it, “We already have a perfect tax system the GST. The more you pay, the more tax you pay.”
The broader point is that Canada’s auto policy is increasingly out of step with economic reality. Consumers aren’t lining up for EVs in the numbers Ottawa expected not because they’re anti-environment, but because EVs remain expensive, charging infrastructure is inconsistent, and cold-weather performance is still an issue in much of the country. For many Canadians, an EV just isn’t practical yet.
David Adams, head of Global Automakers of Canada, offered a constructive way forward. He suggested Ottawa launch a modern equivalent of the 1961 Royal Commission on the Automotive Industry, which laid the groundwork for the historic Auto Pact with the U.S. That agreement ushered in an era of cross-border cooperation and economic growth. Maybe it’s time for a new North American framework one focused on critical minerals, semiconductors, and vehicle software that positions Canada as an indispensable partner in a modernized, integrated auto ecosystem.
The Trudeau government insists the EV mandate is essential to achieving its 2030 emissions goals. But policies that look good on paper don’t always translate to progress on the ground. A forced transition without the proper infrastructure and market readiness risks backfiring driving jobs, investment, and innovation out of Canada.
Conservatives argue that the mandates should be scrapped entirely, and on this issue, they have a point. Environmental responsibility and economic competitiveness don’t have to be at odds. But a successful transition requires flexibility, collaboration with industry, and a deep understanding of how the market actually works.
Canada’s auto industry doesn’t need more red tape. It needs smart, balanced policy that supports both green innovation and economic growth. The federal government should listen to the people who know the business best the ones building the cars, selling them, and keeping the Canadian economy running.
Because if Ottawa stays the course, the road ahead for Canada’s auto sector looks increasingly like a dead end.
