Prime Minister Carney Launches New Strategy to Transform Canada’s Auto Industry
Canada Auto Industry Strategy Targets EV Growth and Worker Protection
Vaughan, Ontario – Prime Minister Mark Carney has unveiled a sweeping new federal strategy aimed at transforming Canada’s automotive sector, positioning the country as a global leader in electric vehicle (EV) manufacturing while reducing reliance on a single export market.
Speaking in Vaughan, Carney said Canada’s auto industry is facing a period of profound change, with global trade uncertainty and U.S. tariffs placing pressure on a sector that exports more than 90 per cent of Canadian-made vehicles and 60 per cent of auto parts to the United States.
The new strategy forms part of the federal government’s broader industrial plan to build a more resilient, sustainable, and independent Canadian economy, while leveraging Canada’s clean electricity advantage and world-class technology expertise.
Major Investments to Drive Auto Sector Growth
At the centre of the plan is a significant investment to accelerate growth and diversification in auto manufacturing. The federal government will allocate $3 billion from the Strategic Response Fund and up to $100 million from the Regional Tariff Response Initiative to help the industry adapt to global shifts and expand into new markets.
Manufacturers will also be encouraged to invest in zero-emission technologies through the Productivity Super-Deduction and reduced corporate tax rates for clean technology producers.
With Canada’s new auto strategy, we’ll make Canada a global leader in EV production — and unlock massive new opportunities for the Canadian auto industry and Canadian workers. pic.twitter.com/VXUtF3DK8x
— Mark Carney (@MarkJCarney) February 5, 2026
Emissions Standards and EV Targets
To align emissions policy with long-term outcomes, the government will introduce strengthened greenhouse gas standards that place Canada on a path toward 75 per cent EV sales by 2035 and 90 per cent by 2040. These standards will allow Ottawa to repeal the Electric Vehicle Accessibility Standard, giving automakers greater flexibility in how they meet emissions targets while still driving EV adoption over time.
Making EVs More Affordable for Canadians
To boost domestic demand, the government is launching a five-year, $2.3 billion EV Affordability Program, offering purchase or lease incentives of up to $5,000 for battery electric and fuel-cell vehicles, and up to $2,500 for plug-in hybrids.
Vehicles priced up to $50,000 from countries with free trade agreements will qualify, while Canadian-made EVs and PHEVs will not be subject to the cap, a move designed to support domestic production.
In addition, $1.5 billion will be invested through the Canada Infrastructure Bank to expand EV charging and hydrogen refuelling infrastructure nationwide.
Trade Diversification and Worker Protection
The strategy also strengthens Canada’s automotive trade framework, maintaining counter-tariffs on U.S. auto imports and enhancing remission programs that reward companies investing and producing in Canada. Ottawa recently signed new mobility and EV cooperation agreements with South Korea and China, aimed at attracting joint-venture investment and diversifying export markets.
To support workers during the transition, the government will introduce a new Work-Sharing grant to prevent layoffs, establish a national workforce alliance, and invest $570 million in employment assistance and reskilling for up to 66,000 workers, including displaced auto workers.
Building the Future of Canadian Manufacturing
Canada’s auto sector supports more than 500,000 jobs and contributes over $16 billion annually to GDP. Federal officials say the new strategy builds on earlier industrial initiatives in steel and softwood lumber, forming a coordinated effort to protect strategic industries and prepare them for a low-carbon, globally competitive future.
“By protecting the industry and incentivizing automakers to build here, we can transform Canada’s workers and businesses to compete and win in this new global environment,” Carney said.
GTA Today will continue to follow how this strategy affects auto manufacturing, EV investment, and workers across the Greater Toronto Area.
