February 5, 2026
RED FM News Desk
Prime Minister Mark Carney has announced a sweeping new industrial strategy designed to transform Canada’s automotive sector and shield it from global economic volatility. Speaking at a manufacturing facility, Carney emphasized that his government is focusing on factors within Canada’s control to build a more resilient, independent economy. Central to the plan is the introduction of a major electric vehicle (EV) incentive program and a pivot away from the previous administration’s strict sales mandates in favor of new emission standards.
To improve affordability for Canadians, the government is launching a $2.3 billion EV affordability program starting February 16. Under this five-year initiative, consumers can receive incentives of up to $5,000 for battery-electric and fuel-cell vehicles, and up to $2,500 for plug-in hybrids (PHEVs). However, these rebates are restricted to vehicles priced under $50,000 and must be imported from countries with which Canada has an existing free-trade agreement. Notably, this criteria excludes Chinese-made EVs from receiving federal subsidies.
In a significant policy shift, the Carney government has repealed the Trudeau-era mandate that required 100% of new vehicle sales to be electric by 2035. The new strategy adopts a more flexible approach, setting targets of 75% EV sales by 2035 and 90% by 2040. To support the shift toward cleaner technology, the government is also allocating $1.5 billion to expand the national charging station network and offering tax cuts for companies manufacturing zero-emission technologies.
Recognizing that the auto industry contributes $16 billion annually to Canada’s GDP and employs over 500,000 people, the strategy includes robust protections for workers amid an ongoing trade war with the United States. A new Work-Sharing grant has been established to prevent layoffs, and $570 million will be invested to provide reskilling and employment assistance for 66,000 workers. To maintain a level playing field for domestic manufacturers, the government confirmed it will keep the 25% counter-tariffs on vehicle imports from the U.S. in place.
Furthermore, the government is committing $3 billion from the Strategic Response Fund and $100 million from the Regional Tariff Response Initiative to help the industry diversify into new global markets. “The future of the auto industry is electric,” Carney stated, adding that Canada must develop its entire domestic supply chain to secure its position as a global leader in the next generation of automotive technology.
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