Canada Just Ditched Its EV Mandate But Don’t Expect An All-Combustion Future

Another EV mandate has fallen. Sort of. Canada’s rising-quota mandate that would’ve forced all new vehicles to emit zero emissions by 2035 is now being replaced by a less aggressive greenhouse gas management strategy. Under the new standards, 75 percent of new light-duty vehicles sold in Canada are expected to be electric by 2035, rising to 90 percent in 2040. A provision exists to re-examine and potentially revise these standards in five years’ time, but it does mean that a small number of likely enthusiast-oriented new vehicles can still be fossil-fuelled for the foreseeable future.

For context, Automotive News Canada reports that approximately 1.89 million new vehicles were sold in Canada last year, and that’s without data from Jaguar, Land Rover, Maserati, or Porsche included. Assuming total annual sales holds, roughly 472,500 new vehicles in 2035 and 189,000 new vehicles in 2040 could potentially burn gasoline. That should cover pretty much all the combustion-powered sports and performance cars the Great White North could possibly want. Canada’s 2040 target also aligns with the E.U.’s recently walked-back EV mandate for 2035, so there’s some synergy there.

However, those internal combustion accommodations are assuming that the greenhouse gas emissions targets are met largely by EV sales. Traditional, plug-in, and range-extender hybrids will likely play a role in the marketplace, especially in segments that demand towing and other things battery electric vehicles aren’t typically ideal for. In that case, the allowable cap for combustion-powered vehicles will shrink, although it should allow a number of more traditional enthusiast cars to stay on sale. It’s also worth noting that heavy-duty pickup trucks with a gross vehicle weight rating of more than 10,000 pounds aren’t classified as light-duty vehicles and therefore won’t be subject to the same emissions standards as light-duty vehicles.

Plus, it’s not like Canada isn’t going to be incentivizing EV sales in the near future. With federal rebates ending early last year, EV sales in Canada plummeted to around 94,500 units through December, as Automotive News Canada reports. That number is going to have to rise quickly, so the government is throwing money at the problem. A new incentive program for EVs and plug-in hybrid is rolling out as early as Feb. 16, and the way it works is pretty interesting.

This year, electric vehicles priced under $50,000 and built in nations Canada has free trade agreements with, along with all battery electric vehicles made in Canada, will be eligible for a $5,000 purchase or lease incentive. That figure ramps down to $4,000 in 2027, $3,000 for 2028 and 2029, and $2,000 for 2030. Likewise, plug-in hybrids meeting the same requirements are eligible for a $2,500 purchase or lease incentive this year, falling to $2,000 in 2027, $1,500 for 2028 and 2029, and $1,000 in 2030. If you’re keeping track at home, the only EV with a price tag above $50,000 that qualifies for the new incentive is the Dodge Charger Daytona.

Other headline figures include $1.5 billion allocated to national charging infrastructure, up to $3 billion in manufacturing support from deductions to tax credits, and more than $100 million allocated towards employees in training and on reduced hours. All sensible stuff, although there is one big caveat: Detailed updated carbon dioxide emissions standards for the forthcoming years haven’t officially been announced yet, and that’s where the real intentions of this shift will be revealed. Will hybrids meaningfully contribute to this proposed reduction in carbon emissions or will this shift essentially just be a scaled-back EV mandate?

Regardless, escalating from a 15 percent battery electric vehicle and plug-in hybrid market share in 2024 to an EV mandate of 60 percent in 2030 to 100 percent battery-electric in 2035 would’ve been a tall order. It’s also the sort of regulation that runs the risk of creating a perverse incentive depending on market demand. After all, it’s a lot easier and cheaper for manufacturers to restrict the number of combustion-powered vehicles sold in Canada than to attempt to maintain sales volumes while pumping up EV sales to meet the previous targets.

Some of the hurdles are significant. According to a Canadian Automobile Association study, 22 percent of respondents living in multi-unit dwellings have no access to home charging at all. Considering only 52.6 percent of Canadians who responded to the 2021 census lived in single-family detached homes, that’s a huge chunk of infrastructure that will need to be built out. Until that time comes, owning an electric vehicle may be unfeasible for many. With the new national charging infrastructure plan including measures for “making buildings EV-ready,” relaxing EV targets seems like a sensible way to let infrastructure catch up.

As it stands, industry bodies seem relatively appreciative of this latest announcement. As David Adams, President and CEO of Global Automakers of Canada, stated in a media release:

Today the federal government released its automotive strategy. We are pleased that the government has provided greater clarity on issues such as the Electric Vehicle Availability Standard, the re-instatement of EV incentives, and a commitment to aggressively build out the charging infrastructure. These are issues for which we have long sought direction from government and should give Canadians more choice, improve affordability, and make electrified vehicles more accessible. Achieving emissions goals requires clarity and certainty. A single, aligned electrification strategy across federal and provincial governments is critical for planning and investment purposes, as well as giving all Canadians the same vehicle options.

By softening EV adoption targets, Canada seems to be warming up to a certain reality. The ambitious targets set years ago simply weren’t pragmatic, and sometimes goals have to shift. Especially when your motor vehicle safety standards are closely tied with those of a country that’s going two feet in on internal combustion. Are there measures I wish were in this new action plan? Sure. A dedicated used EV tax credit would go a long way to enhancing affordability for the millions of Canadians who can’t afford a brand new car, and as I stated earlier, we’ll need concrete figures on emissions standards to reveal the true intent of this rollback. For now, it looks like the possibility for me and my fellow Canucks to row our own gears into the future is back on the menu. How’s that for a glimmer of hope?

Top graphic image: Dodge