Four months after the suspension of what was called the ‘EV mandate,’ Canadian Prime Minister Mark Carney announced on Thursday that the country is scrapping it for new manufacturing and consumer-focused incentives.
In a series of new measures set on transforming Canada’s auto industry, the Government announced that it will implement a five-year EV Affordability Program to lower the cost of EVs, alongside revised zero-emission targets.
The program replaces the Electric Vehicle Availability Standard implemented by former PM Justin Trudeau, which was suspended last year as the new administration reviewed the policy framework.
The CA$2.3 billion EV Affordability Program will offer Canadian consumers — both individuals and businesses — incentives of over CA$5,000 for battery electric and fuel electric vehicles and CA$2,500 for plug-in hybrids.
The vehicles must have a final transaction value of up to CA$50,000 and must be manufactured in countries with which it has free trade agreements.
For vehicles produced domestically, the CA$50,000-cap will not apply.
The country is also investing in its national EV charging network, with a $1.5 billion investment made through the Canada Infrastructure Bank’s Charging and Hydrogen Refueling Infrastructure Initiative.
Renewed ZEV Targets
The Canadian Government is introducing stronger greenhouse gas emissions standards as it aims to comply with an adjusted goal of 75% of all new vehicles being electric by 2035 and 90% by 2040.
These measures will allow Carney’s government to “repeal the Electric Vehicle Accessibility Standard,” as the previous target required 20% of zero-emission vehicle sales by 2026, progressing towards 100% in 2035.
The government also believes that a new Productivity Super-Deduction alongside reduced corporate tax rates for zero-emission technology manufacturers, will further encourage investment in EV production and clean technologies.
Productivity Super-Deduction represents tax incentives that allow businesses to immediately write off a larger share of new capital investments
Manufacturing
Ottawa announced the allocation of CA$3 billion from the Strategic Response Fund and up to CA$100 million from the Regional Tariff Response Initiative to help the auto industry “adapt, grow and diversify to new markets” alongside the United States.
As concerns for the country’s manufacturing jobs — with the auto industry mostly located in Ontario — the Government vowed to “protect Canadian auto workers and businesses from immediate pressures.”
They aim to provide a ‘Work-Sharing’ grant, a tool to prevent layoffs and support worker retention as businesses plan for the future, as well as employment assistance and reskilling support for up to 66,000 workers across Canada, including displaced auto workers, through a $570 million investment.
The plan also includes the establishment of “a new workforce alliance of industry, labour, and training partners to address bottlenecks and catalyse private investment.”
International Partners
According to the Government, more than 90% of Canadian-made vehicles and 60% of Canadian-made auto parts are currently exported to the US.
However, the relations between the two neighbors are now threatened by policy shifts.
Canada benefits from the USMCA free-trade deal, which is set to be renegotiated later this year.
However, parts that do not comply with it face a 50% tariff (including a 15% baseline duty and a 35% rate added last year).
According to the strategy unveiled this Thursday, Canada will maintain counter-tariffs on auto imports from the US as it aims to “ensure a level playing field for Canadian automotive manufacturers in the domestic market.”
The country is working towards strengthening the “automotive remission framework to reward companies that produce and invest in Canada.”
Carney has been reaffirming the country’s focus on attracting international partners besides the US.
After reaching an agreement with China for an annual import of 49,000 Chinese EVs at a reduced tariff of just 6.1%, Canada recently signed a memorandum of understanding (MOU) with South Korea to promote mutual industrial collaboration.
