On September 5, 2025, Prime Minister Mark Carney stood before a crowd at an aerospace facility just outside Toronto, delivering a message that would send ripples through Canada’s auto industry, climate policy circles, and political landscape. The federal government, he announced, would delay by at least one year the electric vehicle (EV) sales mandate that had been slated to require 20 percent of all new vehicles sold in Canada in 2026 to be electric. Instead, the government would launch a comprehensive 60-day review of the policy, focusing on reducing costs for both consumers and automakers. It was a dramatic turn for a policy that had, until recently, been a centerpiece of the country’s climate ambitions.
This EV mandate, introduced by the Liberal government under former prime minister Justin Trudeau, was designed to escalate over time—rising from 20 percent in 2026 to a full 100 percent by 2035. The intent was clear: push Canada’s transportation sector, one of its largest sources of greenhouse gas emissions, toward a cleaner, electrified future. But as Carney explained, the world had changed. “What’s going on is not a transition, it’s a rupture, and its effect will be profound,” he told the assembled audience, according to Winnipeg Sun. “Workers displaced from their jobs, supply chains that have existed for decades disrupted.”
Indeed, the backdrop to Carney’s announcement was a series of economic headwinds. Statistics Canada had just reported a loss of 66,000 jobs in August 2025, pushing the national unemployment rate to 7.1 percent—the highest it’s been in nine years. Meanwhile, U.S. President Donald Trump’s administration had imposed new tariffs on Canadian automotive exports, rattling supply chains and fueling uncertainty for manufacturers and workers alike. In this climate, Carney argued, decisive action was needed. “These measures are about protecting Canadian jobs and ensuring that our businesses can compete,” he said.
Industry leaders, who had been lobbying against the mandate in recent months, welcomed the pause. Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, described the move as pragmatic. “We punted on the EV mandates at a time when this isn’t going to work,” he said, as reported by Winnipeg Sun. The hope is that the 60-day review will provide the breathing room needed to address cost challenges and supply chain bottlenecks that have made meeting the original targets increasingly difficult.
But not everyone is convinced this is the right direction. Conservative Leader Pierre Poilievre quickly seized on the announcement as a victory for his party, which has long criticized Liberal climate policies as unrealistic and economically damaging. “Today he’s flip-flopped after being a passionate advocate for banning gas powered vehicles,” Poilievre told reporters in Ottawa, according to CBC. Yet, he also called the delay a “clumsy retreat,” lamenting that Carney was merely promising to delay, not scrap, the mandate outright. “Mark Carney can’t even get his flip-flops right,” he quipped.
From the environmental side, the reaction was more nuanced. Joanna Kyriazis of Clean Energy Canada saw the delay as a potential opportunity, saying, “Today’s announcement of a delay in application by one year and a broader review of the policy can be an opportunity to better meet its most important objectives: giving consumers choice and getting EVs into the hands of those who want them.” Groups like Clean Energy Canada and the Pembina Institute suggested that the pause could be used to introduce new consumer incentives, expand charging infrastructure, and even reconsider tariffs on Chinese-made EVs—moves they argue could make electric vehicles more accessible and affordable.
Carney, for his part, insisted the review was part of a broader “climate competitiveness” strategy. “We’re using this as an opportunity, as part of a broader strategy on climate competitiveness, to look at all our measures to help get greenhouse gases down,” he said, as reported by CBC. He pointed to the need to examine how the EV mandate interacts with other policies, including clean fuel standards, investment tax credits, and trade policy. The government, he emphasized, is “focused on results.”
The EV mandate wasn’t the only policy under the microscope. Carney also announced a new “Buy Canadian” procurement policy, set to begin rolling out in November 2025. The rules will require federal departments and Crown corporations to prioritize Canadian suppliers when awarding contracts, starting with steel and softwood lumber in federal defense and construction projects above a yet-to-be-determined threshold. According to government estimates, this policy could affect roughly $70 billion in government spending. Provinces and municipalities will be given a “roadmap” to align their procurement with the federal approach. “Now we need to use government procurement using Canadian taxpayer dollars to spur Canadian businesses for longer term prosperity to support Canadian industries,” Carney said.
To further address economic pressures, the government announced the creation of a $5-billion Strategic Response Fund, which will replace the existing Strategic Innovation Fund. This new program is designed to help companies retool production lines, train employees, and seek new markets, with the goal of keeping Canadian businesses globally competitive. Additional measures include a $370-million biofuel production incentive and expanded Employment Insurance (EI) benefits. Starting in mid-October 2025, the one-week waiting period to apply for EI will be eliminated, and “long-tenured” workers will gain an additional 20 weeks of benefits.
Climate policy is also in for a shake-up. Alongside the EV mandate delay, Carney signaled targeted amendments to the Clean Fuel Regulations, aiming to support the domestic low-carbon fuel sector. Finance Minister François-Philippe Champagne is reviewing whether tariffs on Chinese electric vehicles, steel, and aluminum should remain at their current levels—a move that could have significant implications for both industry and consumers.
All these interventions, according to CBC, represent the most extensive economic and climate policy recalibration since Carney became prime minister. The government’s background documents make it clear: the focus is on balancing environmental goals with economic competitiveness, and on ensuring that Canadian workers and industries are not left behind.
But as the dust settles, questions remain. Is the zero-emission vehicle mandate dead or merely sleeping? Carney himself declined to say whether the policy would be fully repealed, instead framing the review as a chance to design a new, results-oriented climate strategy. “We’ll look at the interactions between the EV mandate, our clean fuel standards, our investment tax credits, our trade policy—all of those elements—because what this government is focused on is absolutely results,” he said on Friday.
With the expiration of the federal EV consumer rebate earlier this year, ongoing American tariffs, and a volatile job market, the government faces a tricky balancing act. Environmental groups warn that Canada risks falling behind other countries—like the European Union, where EVs accounted for 21 percent of new car sales last year—if it does not move quickly to address consumer barriers and infrastructure gaps. Meanwhile, political pressure is mounting from both sides: Conservatives see the delay as proof of their arguments, while Liberal environmentalists are looking for signs that Carney’s government will chart a bold path forward.
For now, Canada’s EV mandate is on hold, but the debate over its future—and the future of the country’s climate policy more broadly—is just getting started. The next 60 days, and the choices made in their aftermath, could shape Canada’s economic and environmental trajectory for years to come.
