Canada’s Prime Minister Mark Carney on Feb. 5 unveiled a new industrial strategy to transform the country’s automotive sector, and experts told WardsAuto they were optimistic about its prospects.
The plan involves billions of dollars in financial incentives as well as regulatory shifts. The incentives include tariff credits for Canada-based manufacturers, investments into EV manufacturing, sales and charging. The government also committed to replacing a rigid EV sales mandate with a greenhouse gas emissions target. Finally, the plan also makes commitments to workforce assistance programs and notes Canada’s recent efforts to diversify trade relations are core parts of its strategy.
“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,” Carney said in a statement. “We are making strategic decisions and generational investments to build a strong Canadian auto sector, where Canadian workers build the cars of the future,” Carney said in a press release.
The new strategy found broad favor from the country’s auto industry, and in conversations with WardsAuto, trade association leaders and analysts pointed to four parts of the plan as highly impactful.
1. Electric vehicle purchase incentives for consumers
Canada set aside $2.3 billion Canadian dollars ($1.69 billion) for a five-year program, dubbed the EV Affordability Program, that would incentivize purchases of electric vehicles through 2030.
“They went big, and we were really surprised by that,” said Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers' Association.
The program would offer CA$5,000 for sales and leases of battery electric and fuel cell EVs, and CA$2,500 for plug-in hybrids, starting Feb. 16, 2026. Handouts are limited to autos costing CA$50,000, provided they are made by countries who have free trade agreements with Canada (so including the U.S. and excluding China). No such price cap applies to Canada-made EVs and hybrids.
Canada has had EV subsidies in the past, but they have been paused since March 2025. The government estimates the program could incentivize over 840,000 new EVs.
One potential political problem is that subsidies could be paid on U.S. exports under the US-Mexico-Canada Agreement. That means Jeep Compass EV models that had been scheduled for production by Stellantis in its Brampton, Ontario, plant, but will now be made in Illinois, in the U.S., could be eligible.
However, Kingston stressed the move was a “clever way” to deny manufacturers in China subsidies “without saying so” and was a useful card on the table ahead of the upcoming USMCA review negotiations.
2. Charging network investments
Another big-ticket item detailed in the plan is boosting Canada’s national EV charging network with CA$1.5 billion investments via the Canada Infrastructure Bank.
Kingston said this was needed and a “good start,” although more public investment could be required to meet the “eye-watering costs” of expanding home charging and refitting condominiums with charging points. The initiative would reduce the “rage anxiety” felt by Canadian consumers fearing a flat charge, especially during the country’s cold winters – which has depressed sales, said Kingston. He hoped better charging, plus the subsidies, would create a large enough EV fleet to make public charging stations profitable, encouraging sustainable private investment.
Ross McKenzie, former managing director of the Waterloo Centre for Automotive Research, argued that Canadian charging networks were already significant, especially in the key urban corridor from Windsor, via Toronto, Ottawa and Montreal to Quebec City. He said the CA$1.5 billion would be enough to retrofit condominiums and ensure sufficient charging points along the Trans-Canada Highway, which runs 4,860 miles from Victoria, British Columbia, to St. John’s, Newfoundland.
“You would have substantial coverage,” he said.
3. Billions in subsidies for auto manufacturing
Canada said it would dedicate up to CA$3 billion from the government’s Strategic Response Fund and CA$100 million from a Regional Tariff Response Initiative for investments in manufacturing.
“To set the sector up for long-term success, this funding will help address immediate challenges facing the sector—including electrification, automation and connected technologies—while positioning Canada as a place where the vehicles of the future are built,” according to a backgrounder released by the government.
In particular, the government highlighted the funds could be used for assembly and parts production, to maximize investments for suppliers of Canadian-made steel and aluminum, and to make the country’s domestic supply chain more resilient.
However, Brendan Sweeney, managing director of the Ontario-based Trillium Network for Advanced Manufacturing, stressed that the government should be careful about choosing partners, given past subsidies to companies such as General Motors and Stellantis did not prevent them scaling back Canada-based production.
Indeed, during 2025, Honda and Toyota made 76.5% of vehicles manufactured in Canada with the remainder made by the Detroit 3. Sweeney said he wanted smart industrial subsidy offers requiring companies to fulfil Canadian production promises, but then also “continue on a similar trajectory after the covenants are done.”
Otherwise, Sweeney said, “we might just fall into this practice of giving companies money.”
Sweeney is more supportive of a tradeable import credit system flagged in the strategy. Vehicle manufacturers would earn import credits through production and investment in Canada, spending these benefits on reducing Canadian auto tariffs. Companies could sell surplus credits to automakers earning insufficient Canadian production credits to secure tariff reductions.
“Enable access for companies that make cars here and make it more costly for companies that don't want to invest in Canada,” said Sweeney.
4. A pivot from EV sales targets to emissions standards
Finally, the plan projects scrapping Canada’s sales mandate — the Electric Vehicle Availability Standard, which would have ended sales of new ICE cars by 2035 — and replacing it with fleet-wide tailpipe greenhouse gas emission standards.
“More stringent Canadian GHG emission standards for model years 2027 to 2032 will be introduced to drive emission reductions in a technology-neutral manner while increasing the number of zero-emission vehicles on the road,” according to the backgrounder. “Companies will be able to use a wide array of technologies to meet the standards in the early years and meet consumer preferences. However, a larger percentage of EVs will be required by all companies to meet the standard over time.”
The government said it expects new emission standards will drive a 75% EV adoption rate by 2035 and 90% EV adoption rate by 2040.
Lucas Malinowski, vice president of federal affairs for Global Automakers of Canada, said the plan "will give OEMs more flexibility to meet greenhouse gas parameters.”
That said, as with much of the new strategy, extra details are awaited on the emissions targets and level of compulsion, said Malinowski. One concern he flagged is that Canadian and American emissions standards targets might diverge.
“OEMs will have to consider whether they make different models for the [US] market than they do for the Canadian market,” he said.
Will Canada’s auto plan work?
Will the strategy enable the Canadian auto sector to make more vehicles locally, given more than 90% of Canada-made vehicles and 60% of auto parts are currently exported to the U.S., and the country is facing unprecedented American protectionism?
That, said Malinowski, is an “open question,” depending on the forthcoming details of the plan; how this summer’s review of the USMCA shakes out; and whether the charging infrastructure investments and consumer subsidies increase EV demand. McKenzie hoped that the plan would encourage the Detroit 3 OEMs who have mothballed Canada production to revive these plants in the future.
“I am cautiously optimistic and borderline bullish,” he told Wards Auto
