Carney launches new strategy to transform auto industry

The federal government is rolling out a sweeping new automotive strategy designed to reduce Canada’s reliance on the United States, accelerate electric vehicle production and protect tens of thousands of workers amid growing global trade uncertainty.

Prime Minister Mark Carney announced the measures, positioning Canada’s auto sector as a cornerstone of a broader industrial strategy aimed at building a more resilient and independent economy.

More than 90 per cent of vehicles assembled in Canada and roughly 60 per cent of auto parts are currently exported to the U.S., leaving the industry particularly exposed to shifts in trade relations.

The new plan includes billions of dollars in investments, tougher emissions standards and new trade partnerships, with the goal of making Canada a global leader in electric vehicle manufacturing.

To spur investment, the government will allocate $3 billion from the Strategic Response Fund, along with up to $100 million from the Regional Tariff Response Initiative, to help the auto industry adapt, grow and diversify into new markets. Automakers will also be encouraged to invest in clean technologies and EVs through the federal productivity super-deduction and reduced corporate tax rates for zero-emission technology manufacturers.

On the regulatory side, Ottawa plans to introduce stricter greenhouse gas emissions standards that would put Canada on track for electric vehicles to account for 75 per cent of new vehicle sales by 2035 and 90 per cent by 2040. As part of that shift, the government says it will repeal the existing Electric Vehicle Accessibility Standard, allowing manufacturers to meet emissions targets using a broader range of technologies while still driving long-term EV adoption.

To boost domestic demand, the government is launching a five-year EV Affordability Program worth $2.3 billion. The program will offer purchase or lease incentives of up to $5,000 for battery electric and fuel-cell vehicles, and up to $2,500 for plug-in hybrids. Incentives will apply to vehicles with a transaction value of up to $50,000 from countries with which Canada has free trade agreements, while the cap will not apply to Canadian-made EVs and plug-in hybrids.

In addition, $1.5 billion will be invested through the Canada Infrastructure Bank to expand the national EV charging and hydrogen refuelling network.

To support workers during the transition, the government announced a new work-sharing grant to help prevent layoffs, along with the creation of a workforce alliance bringing together industry, labour and training partners. Ottawa will also invest $570 million to provide employment assistance and reskilling support for up to 66,000 workers nationwide, including displaced auto workers.