Ottawa to relaunch EV rebates program in 2 weeks with new auto strategy

OTTAWA – The federal government announced a suite of new electric vehicle policies Thursday, including the reintroduction of the popular rebate program and the elimination of the EV sales mandate in favour of stricter emissions standards for the auto sector.

The move is the latest rollback of climate policies enacted by former prime minister Justin Trudeau. The government of Prime Minister Mark Carney cancelled the consumer carbon price and halted the implementation of an emissions cap on the oil and gas sector.

Speaking at an auto parts manufacturer in Woodbridge, Ont., Carney said Thursday Ottawa pitched the new plan as a transformation of Canada’s auto sector, which has been battered for months by U.S. tariffs.

“We have everything we need to take the lead in the vehicles of tomorrow, and we’re positioning Canadian workers and businesses to seize that opportunity,” he said.

The announcement includes the restoration of the EV rebate program — with $2.3 billion to help Canadians cover the cost of a new EV — a new credit system to benefit automakers that produce vehicles in Canada, and a $1.5 billion investment in EV infrastructure like charging stations.

Government officials at a technical briefing Thursday were unable to say exactly what impact these new measures will have on Canada’s overall emissions. They promised to publish modelling in the coming months and the government said it is committed to cutting vehicle emissions in half by 2035.

In 2023, passenger vehicles generated 81 million tonnes of carbon dioxide or its equivalent in other greenhouse gases — almost 12 per cent of Canada’s total emissions.

Carney paused the electric vehicle sales mandate last fall, following pressure from provinces and automakers. That mandate, which was supposed to take effect this year, set a target of having EVs account for at least 20 per cent of auto sales across Canada this year. The target was to increase to 100 per cent by 2035.

The new system discards the sales targets and instead will ratchet up existing tailpipe emissions standards, which the government expects will drive the adoption rate of EVs to 75 per cent of new sales by 2035, and 90 per cent by 2040.

Carney said the new standard will set a maximum of 74 grams of carbon dioxide, or its equivalent, per mile. That’s down from the current federal tailpipe emissions standard of 172 grams per mile — a 56.9 per cent reduction.

Auto companies will be allowed some flexibility on meeting the new standards, including by improving fuel efficiency in gas-powered models, but the government said all companies will be required to increase EV sales over time in order to meet the standard.

The government says it’s still working on the path to get to the 74 grams per mile figure. One official said the work will happen through the regulatory process, with initial regulations targeting the 2027 to 2032 model years.

Ontario Premier Doug Ford, who was not at the announcement, said he welcomes the end of the EV sales mandate as a means to bolster the auto sector in Ontario.

“Ontario has been urging the federal government to end its electric vehicle mandate because it made our auto sector less competitive, undermining investment and threatening jobs at a time when the sector is under attack by President Trump,” Ford said in a statement.

“New federal funding for investments in auto and parts companies, job training and charging infrastructure will complement and enhance Ontario investments and supports.”

The federal Conservatives were not convinced of the benefits of Carney’s plan and dismissed it Thursday as an “insult” to the auto sector.

“Despite the Liberals signing $52 billion in agreements to create an EV supply chain in Canada, the vast majority of vehicles produced and sold in Canada are gas-powered. Today’s announcement will benefit countries like the United States that make far more EVs than Canadians drive,” said Raquel Dancho, the Conservative industry critic.

Auto sector advocates and environmental groups alike were pleased to see the return of EV purchase rebates, which will launch on Feb. 16 and offer $5,000 toward the cost of a fully electric vehicle and $2,500 toward plug-in hybrids. Those rebates will decrease every year until they’re phased out after 2030 — or until the money for the program runs out.

The government says it’s hoping the rebate program will help put 840,000 new EVs on the road. Over the five years the previous program existed, the government spent about $3 billion on rebates for more than half a million new electric and plug-in hybrid vehicles.

Over that period, EV uptake increased from 2.9 per cent of all new vehicles in 2019 to 14.6 per cent in 2024. In 2025, after the money for the rebates ran out, EV market share plummeted to 8.9 per cent through the end of September.

The rebates will only apply to vehicles which cost less than $50,000 and are imported from a country with a free-trade agreement with Canada — meaning the Chinese EVs Ottawa is allowing into the country won’t be eligible for the rebates.

While Thursday’s announcement was hailed by Canada’s auto dealers as a step in the right direction, a spokesperson for the organization representing them said the “arbitrary” price cap on eligible EVs is counterproductive.

“If the policy objective is to get more EVs on the road, we don’t quite see why there has to be a price cap,” Huw Williams of the Canadian Automobile Dealers Association told The Canadian Press.

“It’s an enormously positive first step to get rid of the EV mandate. For us, that’s been our central message, and the need for the return of incentives.”

Brian Kingston, the president and CEO of the Canadian Vehicle Manufacturers Association — which represents the Canadian arms of Ford, GM and Stellantis — also praised the measures announced Thursday but said manufacturers will need time to adjust to the new emissions standards.

“You’ve got to make sure that companies have the ability to plan their product portfolio, have the engineering in place, to address and ultimately comply with these regulations,” Kingston told The Canadian Press.

The Canadian Climate Institute called the overall announcement a positive step, particularly the return of the EV rebate. But it warned the switch away from sales targets to stronger tailpipe emissions won’t achieve the same level of emission cuts or improve the supply of EVs.

“While the improved vehicle efficiency standards provide manufacturers with greater compliance flexibility, they don’t guarantee more EVs will be available to Canadians,” said Rick Smith, president of the Canadian Climate Institute.

While acknowledging the return of the EV rebates as a “positive measure,” Environmental Defence, a Canadian environmental advocacy organization, called the decision to scrap the EV mandate “a huge setback.”

“This approach to regulations is fundamentally weaker than a binding EV sales standard. They give automakers flexibility in how and how quickly they comply,” said Sam Hersh, clean transportation program manager at Environmental Defence.

“Though it is nice to see that the government still has targets for EV adoption, it’s unlikely that these targets will be fulfilled simply by strengthening emission standards.”

This report by The Canadian Press was first published on Feb. 5, 2026.

— With files from Maan Alhmidi in Woodbridge, Ont.