Canadian Prime Minister Mark Carney has introduced a new automotive strategy that “rewards the production of made-in-Canada vehicles and harnesses our world-class capabilities in artificial intelligence and technology expertise to build the cars of the future.”

As part of this effort, the country is revamping its electric vehicle mandate once again. The goal is to “rationalize emissions reduction policies” and put Canada on a path that will see 75% of sales come from EVs by 2035. That would then climb to 90% by 2040. This is a notable shift as the country was previously looking at reaching 100% by 2035.

More: Canada Walks Back EV Mandate Amid US Trade War

Furthermore, Canada is repealing the Electric Vehicle Availability Standard and increasing emissions standards. The government said this will “allow manufacturers to use a wide array of technologies to meet the [new] standards and respond to consumer preferences in the near-term, while driving EV adoption over time.”

New Incentives For Canadians To Go Green

While the country is tapping the brakes on the electric vehicle transition, they’ll encourage Canadians to buy EVs with a new five-year program that will provide individuals and businesses with incentives to go green. Electric and fuel cell vehicles will be eligible for up to $5,000 CAD (3,658 USD), while plug-in hybrids can get up to $2,500 CAD ($1,829 USD).

Canada’s auto industry is facing huge pressures, leaving workers and businesses in a state of uncertainty. So we’re taking control — and launching a new strategy that will transform the industry to be a global leader in electric vehicles.

We’ll reward the production of…

— Mark Carney (@MarkJCarney) February 5, 2026

There’s a $50,000 CAD ($36,574 USD) limit on the final transaction price for vehicles made in countries Canada has a free-trade agreement with, but Canadian-made EVs and PHEVs have no price cap at all.

To further encourage adoption, Canada will invest $1.5 billion CAD ($1.1 billion USD) to improve their charging infrastructure. This aims to make it “easier and more convenient for drivers to charge their EVs across the country.”

Incentives For Businesses As Well

The government is setting aside up to $3.1 billion CAD ($2.3 billion USD) to “help the auto industry adapt, grow, and diversify to new markets.” There will also be tax incentives to encourage companies to invest in electric vehicles as well as clean technologies.

On top of that, the country aims to strengthen the competitiveness of their auto sector by rewarding companies that produce and invest in Canada. They’ll also maintain counter-tariffs on automotive imports from the United States and look to grow automotive imports from elsewhere.

China is front and center as vehicles will be imported from there in the near future. Ultimately, Canada hopes Chinese automakers will setup shop in the country and build vehicles locally. This could help fill the void left by American automakers, who have moved some production stateside.

Support For Autoworkers

Canada announced a handful of measures designed to protect autoworkers in an era of trade wars and electrification. In particular, there will be a new Work-Sharing grant that aims to support worker retention and prevent layoffs.

The country will also provide employment assistance and reskilling support for up to 66,000 people including displaced auto workers. This will be made possible by a $570 million CAD ($417 million USD) investment.

American Tariffs Push Canada To Embrace Other Countries

The government noted over 90% of Canadian-made vehicles and 60% of Canadian-made parts are exported to the United States. This is a huge problem as Canadian-made vehicles have faced a 25% tariff in America (on non-US content) since April.

The country said the tariff is “threatening Canada’s automotive manufacturing industry and the 125,000 direct jobs it supports.” Given this, the country is looking to develop a more independent economy and one that can ship Canadian-made vehicles to new export markets.

In a statement, Carney said “Canada’s new government is fundamentally transforming our economy – from one reliant on a single trade partner, to one that is stronger, more independent, and more resilient to global shocks. We are making strategic decisions and generational investments to build a strong Canadian auto sector, where Canadian workers build the cars of the future.”

Unifor welcomes elements of the new federal auto policy, while calling for bold steps to protect Canadian auto jobs and secure a future for workers at idled plants in Brampton and Ingersoll. #canlabhttps://t.co/r8CXSmPp0S

— Unifor (@UniforTheUnion) February 5, 2026