EVs: Canada’s Go-Big-or-Go-Home Moment

If Canada’s auto sector does not have a clear path toward electrifying what they produce, the industry is doomed. This is especially true for the sub-$40,000 segment of the EV market, which North American auto makers are virtually absent from.

September 05, 2025

(Photo: BYD)

“As both consumers and taxpayers, we are betting the farm on making cars that, with each passing year, are less efficient and more expensive than what is produced elsewhere.”

Aaron Freeman

Prime Minister Mark Carney announced that the federal government will delay the Electric Vehicle Availability Standard.

The standard would ensure the auto industry increases the number and range of vehicles available to consumers, thereby reducing prices by an estimated 20%. However, this policy is running counter to the Carney government’s key narratives around defending Canadian industries most affected by the Trump tariff war. This, taken together with a major downturn in EV sales and a related stall (at best) in rebate programs at the federal and provincial levels, has led the auto industry to place the policy firmly in its crosshairs.

Conservatives have been gearing up to make it the next consumer carbon tax battle, polling shows very low public support for the EV mandate, and Carney’s own resolve on climate measures is so far in stark contrast with his predecessor, and with his own past pronouncements and efforts.

Environmentalists fought hard to obtain the mandate commitment, and it is generally unwise to abandon commitments that we have fought for and won. But advocacy around the mandate must be situated within the political landscape we are operating in, and how it’s changed.

A strategic response – one that speaks to the current political moment – would need to address affordability, and create jobs in Canada’s auto sector supply chain. We also have to acknowledge that this is not the moment for a big-spend program with no off ramp toward fiscal prudence.

But there’s another economic reality that those opposed to the EV mandate must contend with: Despite the recent downward blip in EV sales in Canada and the U.S. pullback on vehicle electrification – which were used to justify the pause in the policy – the global trend toward electrification of transportation is unrelenting. And if Canada’s auto sector does not have a clear path toward electrifying what they produce, the industry is doomed. This is especially true for the sub-$40,000 segment of the EV market, which North American auto makers are virtually absent from.

Each year, even as massive taxpayer subsidies to the auto sector continue, Canada falls further behind world leaders, both in terms EV manufacturing and (at least outside of Quebec and BC) EV adoption. We have been increasing production and sales of EVs, but not at a pace that matches where the world is heading. Worse, North American manufacturers build EVs that are over-priced relative to global competitors, at a time when the market is clamoring for more affordable alternatives. Chinese-made EVs, which are now built to the same or better quality than North America’s, have a price tag that is a third to a half of what it costs to drive off the dealer’s lot here. Unlike most other countries, these less expensive models are not available to Canadians due to protectionist trade policy, including a prohibitive 100% surtax on Chinese auto imports. There is some rationale for an import surtax to account for Chinese state subsidies (although Canada also maintains significant subsidies), and lower Chinese standards on labour and in other areas. But the bottom line is that each time a Canadian purchases a new EV, they are in effect further subsidizing the Canadian auto industry by thousands or tens of thousands of dollars, because they aren’t given the other options in the global market that are less expensive for the same or better quality.

Employing trade policy to safeguard a key industry can be justified, but only if there is a longer-term plan to ensure that industry’s survival. Currently, the only plan seems to be providing ever-larger cheques for auto manufacturers and fewer policy measures to prepare them for where the puck is going. As both consumers and taxpayers, we are betting the farm on making cars that, with each passing year, are less efficient and more expensive than what is produced elsewhere.

There are alternatives. Clean Energy Canada proposes to tailor EV mandates to focus on more affordable models. Another option – which legacy auto makers may hate even more than an EV mandate – would be to negotiate a deal with China to lower import taxes on their cars, in exchange for lifting Chinese retaliatory trade restrictions on canola that are devasting western farmers. Lowering EV tariffs would have strong public support across party lines.  But another essential condition for the deal could involve a commitment to establish an EV manufacturing facility in Canada to build our capacity to produce affordable EVs. There would also need to be enforceable provisions to address cyber-security threats associated with the technology embedded in vehicles. 

Lowering these tariffs would anger Donald Trump, who, depending on the hour of the day, views China as the main barrier to U.S. hegemony. But so far, Canada’s efforts to appease the president seem only to have convinced him that his tariff strategy is working, encouraging further aggression.

If Canada’s auto industry doesn’t want policies like an EV mandate to help secure a viable future, they need to present a clear plan with serious investment for getting us there through other means. The only option that should not be on the table is the status quo, where Canadian consumers massively subsidize car companies with every over-priced car purchase, while taxpayers (including these consumers) sweeten the subsidy pot even further to encourage the production of cars that fewer people want.

Some of my go-to independent media links:

Check out my social venture, Energy Neighbour if you’re thinking about making your home more energy efficient, including heat pumps, battery storage and/or rooftop solar. It’s a no-cost, no-obligation service that makes the process easier and helps get you the best value for your investment. 

You can find me on Bluesky and LinkedIn.

Till next time,
Aaron Freeman

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