Feds launch rebate program to accelerate EV adoption

Canada’s automotive sector is built on nation-to-nation collaboration. Canada has maintained a long history of partnership with the U.S. and Mexico, as well as with Japan, to establish its automotive manufacturing footprint. More recently, Canada developed new partnerships with companies from Europe and the Republic of South Korea to build out a battery supply chain.

Canada is well positioned to attract new investments and diversify export markets by leveraging its free trade agreements that span 51 countries and provide access to more than 1.5 billion consumers. Priority will be given to attracting new entrants that are leaders in EV (electric vehicles) manufacturing and connected vehicle technologies to strengthen the sector’s resilience.

Canada will also be ensuring its regulatory frameworks—including vehicle safety regulations that encompass connected vehicle technologies—have been modernized to facilitate the entry of new vehicles and new investment.

Canada recently deepened its strategic partnership with the Republic of Korea by signing a memorandum of understanding (MOU) to strengthen Canada–Korea industrial collaboration for future mobility. This builds on other MOUs that Canada has signed with global automakers to promote cooperation.

Canada has also agreed to a new strategic partnership with China, a global leader in EV manufacturing, to further diversify trade and catalyze new investment in the automotive sector. The recently announced partnership will look to drive new Chinese joint-venture investment in Canada and allow for a fixed volume of Chinese EV imports into the Canadian market.

The Government of Canada will support major industrial investment through fiscal and other policy levers, including dedicating up to $3 billion from the Strategic Response Fund (SRF) and up to $100 million from the Regional Tariff Response Initiative to support investment in automotive manufacturing, including assembly and parts production. In line with the Buy Canadian Policy, the government will look to leverage these investments to maximize opportunities for Canadian suppliers and Canadian-made goods and services, including steel and aluminum.

To set the sector up for long-term success, this funding will help address immediate challenges facing the sector—including electrification, automation and connected technologies—while positioning Canada as a place where vehicles of the future are built. Priority will also be given to diversification efforts, including new opportunities brought by Canada’s Defense Industrial Strategy, to make the industry and its supply chain more resilient and leverage existing trade agreements with the world.

Canada will leverage new investments in EV production, consumer incentives and charging infrastructure. It will also pursue the aspirational goal of achieving a 90 per cent EV adoption rate by 2040.

The Government of Canada will repeal the Electric Vehicle Availability Standard (EVAS). In doing so, Canada will rationalize emission reduction policies, focusing on the outcomes that matter to Canadians without placing undue burden on the Canadian industry. In light of rapidly evolving technologies, Canada will review these standards after five years to ensure they remain ambitious and aligned with Canada’s overall climate objectives.

Affordability remains one of the top barriers to EV adoption. Federal purchase incentives, alongside regulations and provincial and territorial measures, have a proven track record of driving EV adoption, having helped Canada reach a 15 per cent market share in 2024, up from 3 per cent in 2019.

The Government of Canada will launch a new, targeted five‑year EV affordability program to accelerate EV adoption by offering incentives to consumers and businesses for the purchase or lease of eligible cars with a final transaction value up to $50,000. To support the Canadian automotive industry, the transaction value eligibility cap will not apply to Canadian-made EVs.

Incentives will be up to $5,000 for battery-electric and fuel‑cell electric vehicles, and up to $2,500 for plug‑in hybrid electric vehicles (PHEV). They will decline over time, as shown in the table below. Eligible EVs and PHEVs will be manufactured in Canada or imported from countries where Canada has a free trade agreement. It is projected that over 840,000 new EVs would be incentivized through the program. Canadians could start benefiting from this new program as of February 16, 2026.

Next to affordability, range anxiety and inadequate charging infrastructure are top barriers to EV adoption. A reliable charging network, and the increased confidence of potential EV buyers that comes with it, will facilitate EV adoption.

Over the past ten years, the federal government has provided support to de-risk private investment in EV charging infrastructure, contributing to nearly 60,000 public and private chargers.

Together, these actions aim to position Canada as a leader in the EV market.