Promising billions in incentives for EVs, Canada’s new auto strategy extends workforce support and regulatory changes, aiming to combat Chinese influence and global tariffs.
On February 5, 2026, Canada’s Prime Minister Mark Carney unveiled a new strategy aimed at transforming its automotive sector. The plan, which experts have welcomed, promises financial incentives and regulatory changes to support the industry, particularly electric vehicles (EVs).
The strategy includes tariff credits for Canadian manufacturers and investments in EV manufacturing, sales, and charging infrastructure. The government has opted to replace a rigid EV sales mandate with a greenhouse gas emissions target.
The plan also includes workforce assistance programmes and highlights Canada’s ongoing efforts to diversify its trade relations.
Carney described the strategy as part of a larger shift in Canada’s economy. He explained that the new government was fundamentally transforming the economy from one dependent on a single trade partner to one that would be stronger, more independent, and more resilient to global shocks.
The plan has received widespread support from Canada’s automotive industry. Experts, including trade association leaders and analysts, identified four key elements they expect to have the greatest impact on the sector, as reported by WardsAuto.
One major component is the ‘EV Affordability Program’, which allocates CA$2.3 billion ($1.69 billion) over five years to incentivise consumer purchases of electric vehicles.
Starting February 16, 2026, the programme will offer up to CA$5000 for battery-electric and fuel-cell EVs, and CA$2500 for plug-in hybrids. The subsidies will apply to vehicles priced up to CAD 50,000, provided they are from countries that have free trade agreements with Canada, including the US (but excluding China). Vehicles made in Canada will be exempt from this price cap.
Despite potential political hurdles, such as concerns about US exports under the US-Mexico-Canada Agreement (USMCA), industry leaders have praised the programme, viewing it as a move to limit Chinese influence in the EV market.
The programme is expected to incentivise the purchase of over 840,000 new EVs, helping Canada advance its automotive sector while meeting its climate goals.
