Question Period Note: SUPPORTING CANADA’S AUTOMOTIVE INDUSTRY: ZERO EMISSION VEHICLES AND ELECTRIC VEHICLE BATTERY INVESTMENTS

What is the Government of Canada doing to support Canada’s automotive sector, particularly as it transitions towards production of zero-emission vehicles (ZEVs)?

•The Government of Canada supports the automotive industry’s transition to electrification, which will help maintain and create jobs, promote economic growth and advance the shift towards a net-zero economy.

•Federal and provincial government collaboration with industry has attracted significant investments in recent years to support the transition to electric vehicle production and to establish a Canadian battery supply chain.

•The Strategic Response Fund complements industry’s investments by helping automotive firms adapt to global trade pressures, during this period of transition to electrification.

•These investments are expected to maintain and create well-paying jobs and foster long-term growth in the automotive industry.

The Canadian automotive manufacturing sector supports over 121,000 direct jobs, contributed $17.1 billion in 2025 to Canada’s gross domestic product, and is one of the country’s largest export industries. The sector is anchored by the presence of five automotive manufacturers: Stellantis, Ford, General Motors (GM), Toyota, and Honda— that are supported by a diverse supply chain of nearly 700 automotive parts manufacturers across Canada. In 2025, Canada produced over 1.2 million vehicles, ranking 14th globally in vehicle production.

In recent years, Canada attracted key investments in EV, battery, and battery material manufacturing through a number of initiatives, including the Strategic Innovation Fund (ISED), Special Contribution Agreements (ISED), and Investment Tax Credits (Finance Canada). Some of these investments by the industry include:

• NextStar Energy (LGES), investing $5 billion for an EV battery manufacturing plant in Windsor, Ontario;

• PowerCo, investing $7 billion for an EV battery manufacturing plant in St. Thomas, Ontario; and,

• GM/POSCO, investing $600 million to produce cathode active materials in Bécancour, Quebec.

In a global economic environment characterised by U.S. tariffs, weakened EV demand, and general uncertainty, on February 5, 2026, the Government announced Canda’s Automotive Strategy. The Strategy consists of the following measures:

Supporting major industrial investment in auto manufacturing and technologies

• Strategic Response Fund: Up to $3 billion investment in large automotive manufacturing projects, including those in vehicle assembly and parts production.

• Regional Tariff Response Initiative: Up to $100 million investment in automotive manufacturing projects led by small and medium-sized enterprises, including those that prioritize investment to enhance productivity and diversify trade.

• Buy Canadian Policy: The Government will leverage its procurement process to maximize opportunities for Canadian businesses.

• Productivity Super Deduction: An accelerated capital cost allowance measure that allows manufacturers to write off a larger share of the cost of investment in the first year.
• Clean Technology Manufacturing Investment Tax Credit: A refundable tax credit that incentivizes large-scale investments by reducing the costs of new machinery and equipment used to manufacture or process key clean technologies, including in EV and battery manufacturing.

• Tax incentives and funding to support critical mineral mining and production: This includes the Critical Mineral Exploration Tax Credit, the First and Last Mile Fund and the $2 billion Critical Minerals Investment Fund.

• Canada's national AI strategy: Canada's forthcoming AI strategy will double down on driving AI commercialization and adoption across the industrial economy, including in the connected and autonomous technologies shaping the automotive industry.

Decarbonizing the transportation sector and rationalizing related policy

• Canada-unique greenhouse gas (GHG) emissions standards and repeal EV Availability Standard: Canada-unique GHG standards will offer a sovereign path to reduce emissions from light-duty vehicles (LDVs) that is expected to drive a 75% EV adoption rate by 2035, while providing flexibility in the technologies used to achieve these emission reductions.

• New EV Affordability Program: Five‑year program offering up to $5,000 in incentives to consumers and businesses for the purchase or lease of eligible zero-emissions vehicles with a final transaction value up to $50,000 (Canadian-made EVs exempt from cap). Launched February 16, 2026.

• Develop new national charging infrastructure strategy: The new strategy will focus on private equity, reducing barriers, making buildings EV-ready and ensuring training. It will allocate $1.5 billion to the Canada Infrastructure Bank and seek to identify private sector partners to accelerate nationwide charging projects.

Establishing a comprehensive trade regime

• Strengthen automotive remission framework: The updated framework will aim to better align trade policy with Canada's industrial and workforce objectives. It will also introduce a tradeable credit system. Public consultation is in progress focused on leveraging the framework to reinforce domestic production and attract investment.

Protecting Canadian auto workers and businesses from immediate pressures and bridge them to the future

• New workforce alliance on advanced manufacturing: The alliance will bring together industry, labour and training institutions to tackle urgent labour market challenges in advanced manufacturing—including in the automotive sector.

• Work-Sharing program: A pre-existing investment of over $100 million over two years to support Work-Sharing employers in providing income top-ups to their employees on training and working reduced hours.

• Updated employment insurance (EI) flexibilities: The Government is providing an extra 20 weeks of EI regular benefits to long-tenured workers.
• Labour market agreements with provinces and territories: New funding will enable targeted training, upskilling and employment supports to workers in key sectors, including automotive. An investment of an additional $570 million over three years over and above the $2.9 billion annual investment in these agreements.

• Maintain counter tariffs on vehicles from the U.S.: This includes a 25% tariff on fully assembled LDVs imported into Canada from the U.S. that are not compliant with the CUSMA; and, a 25% tariff on non-Canadian and non-Mexican content of CUSMA-compliant fully assembled LDVs imported into Canada from the U.S.

• Canada has everything it needs to lead in the global electric vehicle (EV) ecosystem: strength in automotive manufacturing, a talented workforce, green energy, and critical minerals.

• In recent years, Canada attracted EV, battery, and battery materials manufacturing investments through a number of initiatives, including the Strategic Response Fund, Special Contribution Agreements tied to production, and Clean Technology Manufacturing (CTM) Investment Tax Credits (ITC).

• These investments will establish the foundation for long-term growth. While the implementation timeframe for specific projects may vary with market conditions, Canada’s automotive industry remains well positioned for long-term success.

• Meanwhile, through the automotive strategy, the Government of Canada is reinforcing investment certainty. The strategy will position Canada to become a global leader in the production of next-generation vehicles.