Canada’s plan to replace its scrapped EV sales mandate with tailpipe emissions standards is facing resistance from both the auto industry and environmental advocates.
Ottawa races to draft replacement regulations by summer that will shape the country’s vehicle market for the next decade.
Prime Minister Mark Carney announced in early February that his government would jettison his predecessor Justin Trudeau’s requirement that electric vehicles make up a growing share of all car sales.
The EV Availability Standard which required 20% EV sales by 2026, rising to 100% by 2035.
Federal officials have since been working toward a replacement policy centred on greenhouse gas emissions per vehicle rather than technology-specific mandates.
Carney has signalled the new rules would be “newly ambitious,” targeting average emissions from a new vehicle of less than half current levels by 2035.
He projected this would lead to 75% EV sales uptake by that date — down from Trudeau’s 100% target but still well above the current penetration rate, the Globe and Mail reported on Sunday.
Too Aggressive Targets
Despite having previously lobbied for a return to the tailpipe approach over EV sales quotas, automakers are now pushing back against the proposed stringency.
David Adams, president of Global Automakers of Canada, and Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association collectively represent the five multinational companies with vehicle assembly plants in Ontario.
Both presidents have warned that Carney’s proposed targets would still require EV uptake levels that the market is not ready to deliver, according to Globe and Mail.
They argued that Canadian manufacturing, already under pressure from US President Donald Trump’s tariffs, will suffer further if domestic regulations are significantly stricter than those south of the border.
Ontario’s Progressive Conservative government echoed the concerns in last week’s provincial budget, warning that automakers in the province could face “disproportionate compliance costs, investment risks and logistical challenges.”
Environmental Groups
Climate advocates are framing the regulations as a test of Carney’s commitment to emissions reduction — and warning that the proposed targets may not go far enough.
Joanna Kyriazis, director of policy and strategy at Clean Energy Canada, said the country should “take steps to diversify away from the US’s backwards approach and align with a world where 30 per cent of new car sales are expected to be electric this year,” the Globe and Mail reported.
Biden-Era Rules
Carney’s government is using tailpipe emissions rules planned under former US President Joe Biden as a baseline.
Those regulations, which were to run from 2027 to 2032, targeted a reduction from approximately 170 grams per mile to 85 grams per mile.
Carney’s February announcement suggested a further decline to 74 grams per mile by 2035 — a level that would represent the first time Canada has set its own vehicle emissions standards independently of the United States.
Previously, Canada simply adopted US pollution limits under the integrated North American market.
With Trump dismantling Biden’s regulations, Ottawa is now charting a separate course.
Broader Policy
The tailpipe debate is playing out alongside a series of other policy shifts that are reshaping Canada’s EV market.
In January, Carney and Chinese President Xi Jinping struck a trade deal allowing up to 49,000 Chinese-made EVs into Canada annually at a 6.1% tariff rate, replacing the 100% duty imposed in 2024.
Ottawa began issuing import permits on March 1, with the first 24,500 allocated on a first-come, first-served basis through August.
The quota rises to 70,000 vehicles by 2030, growing at 6.5% per year.
However, Canada Gazette regulations published on March 11 revealed that the affordable EV requirement — vehicles with import prices below C$35,000 — does not begin until 2027.
The entire first year of the quota carries no price floor, allowing Chinese automakers to prioritise higher-margin models.
Tesla, Polestar, and Volvo — the three automakers that accounted for most China-built imports before the 2024 surtax — are widely expected to be the first to secure permits.
Earlier this month, Tesla moved to dominate the quota by pulling US-made Model 3 units in favour of Shanghai-built vehicles.
Three Chinese automakers — BYD, Chery, and Geely — have been confirmed for Canada entry.
BYD is targeting 20 Canadian dealerships within a year.
Industry Minister Mélanie Joly said in early February that she had already held meetings with “Hyundai, Volkswagen, BYD, Chery and many Chinese automakers” about the Canadian market, while also pushing for a Chinese EV joint venture to supply global markets from Canadian factories.
Not all potential partners have been receptive.
Volkswagen‘s CEO Oliver Blume rebuffed Canada’s attempt to tie auto investment to a submarine procurement deal, as EV reported on March 11.
Domestic Production Gap
The new regulations will intersect with a persistent structural weakness: Canada produces almost no EVs domestically.
As EV reported last week, parliamentary data showed that Canada sold just 1,370 domestically manufactured EVs in 2025 — all from Stellantis (the Chrysler Pacifica plug-in hybrid and Dodge Charger EV).
Total domestic EV production actually declined from 1,793 units in 2023 despite the addition of the Charger.
None of the domestically made models were priced below the C$50,000 affordability threshold set by the government’s own incentive programme.
BMO warned in early March that Canada’s auto production plunge has “stark” implications for the broader economy.
Canada’s auto industry lobby has backed a Conservative plan to scrap the Chinese EV quota entirely, while the opposition has flagged surveillance risks from Chinese-made vehicles.
Ottawa reinstated a C$5,000 EV purchase rebate in February, but with a key restriction: only vehicles priced under C$50,000 qualify unless they are manufactured in Canada.
China-built vehicles are ineligible for the rebate regardless of price, as China does not have a free-trade agreement with Canada. The rebate brings the Tesla Model Y below C$45,000 for the first time.
