Canada’s federal government recently adopted one of the world’s most ambitious EV sales mandates. For that to happen, it will have to drive automakers to shift production in a big way. Beginning in 2026, zero-emission vehicles (ZEVs) will need to make up 20% of all new car, SUV and light-duty truck sales across Canada. This requirement is part of a larger effort to increase the number of electric vehicles (EVs) both on and off the road. The latter includes the state’s goal of achieving 60% electric vehicle market share by 2030, and 100% by 2035.
The mandate is a landmark move in the direction of Canada’s environmental priorities, but has worried automakers with its ambitious nature. Now, the Canadian Vehicle Manufacturers’ Association is sounding that alarm. Without significant changes, they claim, if this mandate is enforced, automakers would likely be on the hook for billions of dollars in credit buys. The association argues that the targets are too ambitious, considering conditions of the market and infrastructure.
In order to make it easier for automakers to meet these sales targets, the government has implemented a new system. Now companies can strategically invest in charging infrastructure to garner the most valuable credits. More specifically, one credit is earned for each $20,000 of private investment in new or upgraded charging stations. This measure caps at 10% of a company’s total sales goal. As a result, its potential impact is minimal in helping the agency to achieve and maintain compliance with the mandate.
The stress from U.S. tariffs only adds insult to injury for Canada’s auto sector. In response, the federal government has temporarily exempted carmakers from having to meet these sales targets. This one-year exemption will go a long way toward giving them the liquidity they need. This new exemption gives producers the opportunity to re-evaluate their supply chain as they continue to face these economic challenges.
On September 5, the Canadian government announced a 60-day consultation on its EV mandate. This decision followed on the heels of emerging public outcry from automakers themselves regarding the achievability of the new goals set forth. We hope that this review will ignite meaningful systemic reforms in the US credit system. It could even lead to a rethinking of the untenable sales goals.
Megan Nichols, an industry analyst, pointed out that discussions are ongoing regarding compliance flexibilities and the effectiveness of current measures.
“Are these compliance flexibilities, such as the purchase of an infrastructure credit for $20,000, is that the appropriate level?” – Megan Nichols
The government is looking to understand these concerns better, with the goal of publishing the results of that review by late 2026. This timeline is particularly important for automakers, as they will need the time to retool production lines and change marketing strategies.
With the introduction of this legislation, Canada is continuing to make progress on their ambitious electric vehicle plan. All stakeholders—including auto industry stakeholders—are continuing to watch for developments on this expanding mandate. They want to understand what they should be doing to support government goals and priorities but still stay profitable in what they do.
