Prime Minister Mark Carney has officially dismantled Canada’s controversial electric vehicle (EV) sales mandate, replacing the strict quotas with a $2.3 billion EV Affordability Program and a return to direct consumer cash incentives.
The announcement, made on 05 February 2026, marks a significant pivot in Canada’s automotive strategy. The previous federal mandate, which would have required 100% of new light-duty vehicle sales to be zero-emission by 2035, has been scrapped in favour of a system focused on fuel efficiency standards and financial “carrots” rather than regulatory “sticks.”
The New Rebate Structure
Effective 16 February 2026, the federal government will reintroduce purchase incentives for vehicles with a transaction value under $50,000:
- $5,000 Rebate: For Battery Electric Vehicles (BEVs) and Hydrogen Fuel-Cell Vehicles.
- $2,500 Rebate: For Plug-in Hybrid Electric Vehicles (PHEVs).
The policy shift follows a 60-day review initiated by Carney in late 2025, during which automakers argued that the previous mandates were unachievable and would lead to inflated prices. While the hard mandate is gone, the government maintains a “goal” of reaching 75% EV sales by 2035 and 90% by 2040 through these new market-driven incentives.
The “China Factor” and Market Competition
The strategy also addresses the looming arrival of Chinese-made electric vehicles. Reports indicate a new trade arrangement could allow up to 49,000 Chinese EVs—such as those from BYD—to enter the Canadian market annually at a preferential tariff rate of 6.1%. This move is intended to lower the entry price for EVs in Canada, though it remains a point of contention for domestic manufacturing advocates.
Public sentiment remains divided. While a recent poll suggests many Canadians are open to more affordable Chinese EVs to combat high living costs, others express concern over the impact on the North American supply chain. In Québec, which remains Canada’s strongest EV market, the reception for these value-oriented models is expected to be particularly high.
For Canadian drivers, the immediate takeaway is clear: the “mandate” era has ended, replaced by a $2.3 billion fund designed to make the transition to electric power a choice of the wallet rather than a requirement of the law.