Reevaluating Canada’s EV Policy amid Trade Tensions

Canada is hitting pause on a key part of its electric vehicle policy, backing off a 2026 sales target that would have required 20% of new light-duty vehicles to be zero-emission. The federal government launched a 60-day review of its Electric Vehicles Availability Standard (EVAS), citing rising trade tensions with the U.S. and growing pressure on Canada’s auto and clean tech sectors.

Until now, EVAS set a clear trajectory: 20% zero-emission vehicle sales by 2026, 60% by 2030, and 100% by 2035. Scrapping the first benchmark, at least for now, pushes the roadmap into uncertainty at a time when the EV supply chain is already navigating tariffs, raw material volatility, and competition for investment.

The review comes as the U.S. recalibrates its tariffs on Chinese EVs, batteries, and critical minerals, measures that threaten to disrupt North American supply chains. Canada’s government framed its move as a buffer, giving the domestic auto sector room to adjust.

But signaling hesitation may have downstream effects.

Competing markets aren’t slowing down. In Europe, EVs made up 20% of new car sales in 2023. In China, the figure passed 50%. Even as Canada’s long-term 2035 target remains intact for now, stepping back from short-term commitments could cause the country to fall further behind, both in adoption and in EV-related investment.

Infrastructure is one of the sectors most exposed to the pause.

Utilities, fleet operators, and charging developers have relied on EVAS benchmarks to guide timelines. Without a firm 2026 target, grid upgrades and station deployment plans may get delayed or downsized.

What to watch:

• The 60-day review could reshape more than the 2026 milestone. Depending on industry feedback and trade signals, the 2030 and 2035 targets may also be reassessed.
• Automakers and suppliers might delay local EV investment decisions until the revised policy framework is clear.
• Provinces with strong climate mandates may push ahead independently, increasing policy fragmentation across Canada.

The move underscores how industrial policy and climate goals are increasingly intertwined. As global players double down on electrification, Canada is weighing whether to stay disciplined on policy or hedge its bets on trade-driven uncertainty. The next 60 days will reveal which path it’s choosing.