Canada’s auto sector is facing a period of sharp transition as global trade shifts and long-standing supply chains come under strain. With more than 90% of Canadian-made vehicles and 60% of auto parts exported to the United States, the federal government says reducing reliance on a single market has become an economic priority.
Against that backdrop, Prime Minister Mark Carney announced a new auto strategy aimed at boosting domestic production, accelerating electric vehicle adoption, and protecting workers as the industry adjusts. The measures are positioned as part of a broader industrial strategy focused on resilience, clean energy, and diversified trade.
Here are the highlights of the “new strategy to transform Canada’s auto industry”:
- Investment support for auto manufacturing: The government will allocate $3 billion from the Strategic Response Fund and up to $100 million from the Regional Tariff Response Initiative to help auto manufacturers adapt, expand, and reach new export markets.
- Tax incentives for clean technology: Manufacturers will be encouraged to invest in zero-emission technologies through the Productivity Super-Deduction and reduced corporate tax rates for clean and EV-focused production.
- Stricter emissions targets, flexible pathways: New greenhouse gas standards aim to reach 75% EV sales by 2035 and 90% by 2040. These targets allow Ottawa to repeal the Electric Vehicle Accessibility Standard, giving manufacturers flexibility in how they meet emissions goals.
- Five-year EV Affordability Program: A central pillar of the plan is a $2.3 billion EV Affordability Program running for five years. It will offer up to $5,000 for battery electric and fuel-cell vehicles in 2026, dropping to $4,000 in 2027, $3,000 in 2028 and 2029, and $2,000 by 2030. Plug-in hybrid incentives will start at $2,500 in 2026, decline to $2,000 in 2027, $1,500 in 2028 and 2029, and reach $1,000 in 2030. That price cap does not apply to Canadian-made EVs or PHEVs. Canadians will begin benefiting from the incentives on February 16, 2026, as the program rolls out to support affordability and long-term EV adoption.
- National charging expansion: The government will invest $1.5 billion through the Canada Infrastructure Bank to expand EV charging and hydrogen refuelling infrastructure nationwide.
- Trade and competitiveness measures: Ottawa will strengthen the automotive remission framework, maintain counter-tariffs on U.S. auto imports, and pursue new partnerships, including agreements with South Korea and China to diversify investment and supply chains.
- Worker protection and reskilling: Supports include a new Work-Sharing grant to prevent layoffs, a workforce alliance with industry and labour, and $570 million for employment assistance and reskilling for up to 66,000 workers.
The federal government plans to use existing and new trade agreements, including an EV deal with China, to attract investment, diversify auto exports, and position the country as a global EV leader.