Ottawa relaunches EV rebate program and unveils new auto strategy

The federal government said it will restart an EV rebate program on Feb. 16 with $2.3 billion in support and scrap the EV sales mandate in favour of stricter tailpipe emissions standards, including a new 74 g CO2-per-mile target.

The federal government announced a package of electric vehicle measures that reintroduces consumer rebates and replaces a previously planned EV sales mandate with tighter tailpipe emissions standards. The plan was presented by Prime Minister Mark Carney at an auto parts plant in Woodbridge, Ont., and is framed as a strategy to support Canada's auto sector. Officials said the government will publish modelling on emissions impacts in the coming months and set initial regulations for model years 2027 to 2032. The package also includes credits for vehicles made in Canada and new investments in charging infrastructure. Key details: - The rebate program will launch on Feb. 16 and offers $5,000 for fully electric vehicles and $2,500 for plug-in hybrids, funded with $2.3 billion. - Rebates apply only to vehicles priced under $50,000 and imported from countries with a free-trade agreement with Canada. The government said this excludes Chinese-made EVs from rebate eligibility. - The government is replacing the planned EV sales mandate with stronger tailpipe standards, setting a proposed limit of 74 grams of CO2-equivalent per mile, down from the current 172 g per mile. - Ottawa expects the new standards to lead to EV shares of about 75% of new sales by 2035 and 90% by 2040; officials said the regulatory path will be developed through the rule-making process. - The package includes a $1.5 billion investment in EV infrastructure and a credit system to benefit automakers that produce vehicles in Canada. - The government said rebates will taper each year and end after 2030 or sooner if funds run out; it noted the previous rebate program supported over half a million EVs and that EV market share rose to 14.6% in 2024 before falling to 8.9% in 2025 after funding ran out. Summary: Responses to the announcement were mixed, with Ontario’s government and some industry groups welcoming the move while federal Conservatives and some environmental groups expressed criticism or concerns about weakening a binding sales standard. The government plans to publish emissions modelling in the coming months and proceed with regulatory work targeting model years 2027–2032 to implement the tighter tailpipe standards.