The federal government has launched an automotive strategy that allocates $3 billion in manufacturing support and sets targets of 75 per cent electric vehicle sales by 2035 and 90 per cent by 2040.
John Zerucelli, secretary of state for labour, announced the measures during a visit to Palcam Technologies Ltd. in Newmarket, Ont. The strategy aims to reduce Canada’s reliance on U.S. exports, which currently account for more than 90 per cent of Canadian-made vehicles and 60 per cent of auto parts.
“Our new auto sector strategy is strengthening the industry, helping workers develop new skills, and positioning employers for the future,” Zerucelli said.
Prime Minister Mark Carney announced the initial measures on Feb. 5.
Manufacturing investment and incentives
The government will allocate $3 billion from the Strategic Response Fund and up to $100 million from the Regional Tariff Response Initiative to help the auto industry adapt and diversify to new markets.
Manufacturers will have access to the Productivity Super-Deduction and reduced corporate tax rates for zero-emission technology production to encourage investment in clean technologies and electric vehicles.
EV affordability program details
A five-year EV Affordability Program will provide $2.3 billion in purchase and lease incentives. Individuals and businesses can receive up to $5,000 for battery electric and fuel cell EVs, and up to $2,500 for plug-in hybrids with a final transaction value up to $50,000.
The $50,000 cap applies only to vehicles made by countries with which Canada has free trade agreements. Canadian-made EVs and plug-in hybrids will not face this price cap.
The government will invest $1.5 billion through the Canada Infrastructure Bank’s Charging and Hydrogen Refuelling Infrastructure Initiative to expand the national EV charging network.
Emissions standards and tariff measures
The government will introduce stricter greenhouse gas emission standards for model years 2027 to 2032. These standards will allow the government to repeal the Electric Vehicle Availability Standard, giving manufacturers flexibility to use various technologies to meet requirements.
Canada will maintain counter-tariffs on auto imports from the United States and strengthen its automotive remission framework to reward companies that produce and invest in Canada.
Trade partnerships
The government signed a memorandum of understanding with South Korea to strengthen industrial collaboration for future mobility. Canada is also pursuing a strategic partnership with China to drive joint venture investment and allow a fixed volume of Chinese EV imports into the Canadian market.
Worker support measures
The strategy includes $570 million for employment assistance and reskilling supports for up to 66,000 workers across Canada, including displaced auto workers.
A new Work-Sharing grant will help prevent layoffs and support worker retention. The government will establish a workforce alliance of industry, labour and training partners to address bottlenecks and encourage private investment.
Industry context
Canada’s auto sector supports more than 500,000 workers and contributes over $16 billion annually to GDP. The country produced over 1.2 million passenger vehicles in 2025.
Canadian-made vehicles have faced a 25 per cent U.S. tariff on non-U.S. content since April 2025, threatening 125,000 direct jobs in automotive manufacturing. EV sales are projected to reach nearly 40 per cent of global car sales within five years.
