Canadian automakers warn Carney of ‘extraordinary’ costs they face without EV mandate clarity

Three of Canada’s top automotive executives are warning the prime minister that their companies “face extraordinary and unnecessary compliance costs” as a result of his government’s failure to clarify its rules around electric vehicle sales by the end of last year.

The presidents of Ford, General Motors and Stellantis in Canada issued the warning in a letter to Prime Minister Mark Carney last month urging him to repeal the Liberal government’s EV mandate, which forces automakers to sell an increasing percentage of zero-emission passenger vehicles over the next decade.

The regulations were set to kick in this year, with car companies required to hit a 20 per cent sales target. But in early September, Carney announced he would pause the regulations for 2026, pending a 60-day review of them, citing the “extreme pressure” the auto sector is facing as a result of U.S. tariffs. 

The mandate, known formally as the Electric Vehicle Availability Standard (EVAS), is still in effect for the following years — with the target jumping to 100 per cent by 2035. Despite the government’s pledge in its Nov. 4 budget to “announce next steps on electric vehicles in the coming weeks,” there’s been no announcement yet.

“Time is of the essence,” the automotive executives wrote in their Dec. 12 letter to Carney. “In recent discussions with your colleagues, we learned that the government may not provide direction to companies on the future of EVAS until next year. 

“Auto manufacturers are currently making critical production and potential credit purchase decisions that require clarity on EVAS,” the letter continued. “If a decision on EVAS is not communicated by the end of 2025, companies will face extraordinary and unnecessary compliance costs.”

Brian Kingston, head of the Canadian Vehicle Manufacturers’ Association — which represents the three automakers — said those costs have now become a reality as the companies plan for the 2027 model years and beyond. 

“Companies are making significant and impactful decisions about how they comply with this regulation right now,” he said. “So every day that passes without a decision increases uncertainty and raises costs.”

The letter came at the end of a turbulent year for the North American auto sector, which was rocked by U.S. President Donald Trump’s trade war and reversals of many of his predecessor’s emissions policies. It also came at a pivotal time for the Carney government as it charts a path forward on controversial climate initiatives introduced under his predecessor.

At the Sept. 5 announcement, Carney left open the possibility of a full repeal of the mandate or tweaks to the rules, depending on the results of the 60-day review. 

That review “has now concluded,” according to a spokesperson for Canada’s environment minister, who responded to a request for comment sent to the Prime Minister’s Office. “During the review, the Government received considerable input from stakeholders, provinces and territories and Indigenous organizations,” wrote Keean Nembhard, press secretary for minister Julie Dabrusin.

The goal of the review was to “ensure EVAS continues to reflect market realities, remains effective for Canadians, and does not place undue burden on automakers,” he said. “The Government will announce next steps on the Electric Vehicle Availability Standard soon.”

Kingston has been lobbying the federal government on behalf of the automakers for months to fully repeal the mandate, which he says sets “unrealistic, unachievable targets that ultimately lead to the destruction of the sector.”

Sales and registrations of zero-emission vehicles — which include fully electric ones as well as plug-in hybrids — dipped significantly in 2025 compared to the year prior.

Kingston said there’s been no response yet to the letter, but that the “government is very well aware of the time constraints that are facing the industry and the need for clarity.”

“We felt it was important to write into the prime minister and really underline why a decision needs to be made quickly,” he said.

Kingston said that with the 23 per cent sales target for 2027 looming, automakers need to make production and inventory plans now for that model year and beyond.

“The automotive industry is very much a long lead time industry,” he said. “What that means is that an auto company has to design and build vehicles, and they plan years in advance of that vehicle being launched and ready for market. 

“And that’s why it is so important to have policy certainty from governments.” 

Kingston said there are two ways manufacturers can comply with the mandate if they don’t meet the sales targets. One way is to buy credits from a competitor who sold a surplus, or to earn a credit for every $20,000 spent on charging infrastructure, up to a limit. He says that could cost automakers around $3 billion between now and 2030.

The other way is to restrict the sale of gas-powered vehicles. “Based on current sales rates, we could be talking about pulling between 700,000 and 900,000 gas-powered vehicles from the market this year,” he said. 

“If the government holds these sales rates in place in a market where about two million vehicles are sold every year, that is disastrous,” he added. “That is an economic catastrophe.”

It would also likely mean job losses, he says.

Kingston said the companies support electrification, citing automakers’ recent investments in battery technology — such as the $5-billion EV battery plant in Windsor — and pointing to existing greenhouse gas emissions standards as sufficient in pushing the industry toward zero-emissions vehicles. 

But he says the federal government needs to hold up its end of the bargain by making more progress on charging infrastructure to assuage buyers’ range anxiety, and bring back purchasing incentives to make EVs more affordable — another thing the government pledged to do last year but has yet to announce.

Read the letter in full below: