Question Period Note: Zero-Emission Vehicles – Government Support

Canada’s Electric Vehicle Availability Standard was published on December 20, 2023, in the Canada Gazette, Part II. The United States is taking steps to roll back vehicle emissions standards, and there is ongoing uncertainty for Canada’s auto sector due to the threat of tariffs and countertariffs.

• The global auto market is transitioning to an electric vehicle future. Global EV sales continue to rise year over year. Like the European Union, the United Kingdom, China and 40% of the American auto market, Canada has committed to achieve 100% EV sales by 2035.
• Putting more electric vehicles on the roads is a crucial part of Canada’s approach to tackling climate change, and EVs save consumers money in the long term.
• The Government has supported the transition to ZEVs through investment in critical minerals, EV battery production and EV purchase incentives.

• The transportation sector accounts for 27% of Canada’s GHG emissions. On-road transportation accounts for 66% of the emissions from the sector in 2023. Accelerating the transition from internal combustion engine vehicles to zero-emission vehicles (ZEVs) is therefore critical to meeting Canada’s climate targets and achieving net-zero by 2050. The Government is supporting the transition to EVs through a range of measures, including investments and regulations for both light and heavy-duty vehicles.
• The Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations establishes progressively more stringent GHG emission standards for new light-duty vehicles in alignment with the U.S. national standards. Light-duty EV sales continue to rise. Since the introduction of the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations, the volume of EVs reached 13.4% for the 2023 model year and approximately 15.3% in 2024 Despite strong continued global sales growth, some softening in Canadian sales is expected in 2025 due to the pause of Transport Canada’s consumer rebate program. The Government announced the Electric Vehicle Availability Standard in December 2023, requiring all new light-duty cars and passenger truck sales to be zero-emission by 2035. The regulation includes interim targets of 20% by 2026 and 60% by 2030 with flexibility provisions.
• Since 2020, Canada has secured more than $34 billion in investment in the battery and automotive supply chain. To date, the Government has invested over a billion dollars to support the ZEV transition, including consumer rebates, charging infrastructure, procurement of zero-emission buses, support for ZEV manufacturing and batteries, and consumer awareness. Transport Canada paused the iZEV consumer rebate program this January due to high demand leading to a fully drawn down funding envelope. The Liberal government 2025 platform commitments includedexpanding Canada’s electric vehicle (EV) charging network and exploring ways to reintroduce a purchase incentive that supports Canadian workers and strengthens domestic supply chains.
• Heavy-duty vehicles and engines in Canada are currently regulated by the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations and the standards are aligned with U.S. Phase 2 standards. These vehicles are composed of a diverse variety of vehicles that are used across a wide range of activities and includes local delivery vehicles, garbage trucks, buses, long-haul tractor-trailers, and others.
• The U.S. Environmental Protection Agency (EPA) published a series of rulemakings in recent years. A first rule, finalized in December of 2022, applies to heavy-duty vehicles beginning in 2027 setting new standards for criteria pollutants. The U.S. EPA finalized two additional rules in 2024, with new GHG and air pollutant standards for light-, medium- and heavy-duty vehicles beginning in 2027. Work to amend the relevant Canadian regulations to align with these new U.S. standards is underway. However, the U.S. Congress voted on May 22, 2025 to strike down the California waiver on vehicle regulations, and the House of Representatives voted to repeal the EPA GHG and air pollutant regulations for vehicles on May 21, 2025 in the Big Beautiful Bill that still must be approved by the Senate. Some of these changes are expected to result in protracted litigation, and/or to require regulations to implement. In addition, sustained tariffs and countertariffs on Canadian automotive exports and imports could impact the competitiveness of the Canadian auto sector and make it more costly for them to meet Canada’s ZEV sales targets.

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