In a bold move amid mounting economic pressures, Canadian Prime Minister Mark Carney unveiled the National Automotive Strategy on February 5, 2026, allocating up to $3.3 billion from the Strategic Response Fund to bolster the auto sector. Central to this is a $2.3 billion five-year EV Affordability Program, offering consumers up to $5,000 rebates for battery electric or fuel cell vehicles and $2,500 for plug-in hybrids starting February 16, 2026. These incentives, which taper down annually to $2,000 and $1,000 by 2030, aim to spur 840,000 EV purchases. Additionally, $1.5 billion is earmarked for expanding charging infrastructure through the Canada Infrastructure Bank, addressing range anxiety in a vast country. The strategy scraps the previous EV sales mandate—requiring 20% zero-emission vehicles by 2026 and 100% by 2035—in favor of stricter tailpipe emissions standards targeting 75% EV adoption by 2035 and 90% by 2040.
Yet, this push comes as EV interest in Canada plummets. In 2025, EV sales spending dropped 35%, bucking a 21% global rise, with monthly figures slumping after federal incentives expired. Early 2025 saw new EV registrations fall sharply from prior peaks, hovering at just 8% of total sales amid high costs and inadequate infrastructure. Automakers lobbied against the mandate, citing unfeasible targets; projections for 2026 show only 270,000 ZEVs sold against a needed 380,000, underscoring market rejection. Canadians, facing cold winters and long distances, remain skeptical of EVs' reliability, with hybrids outselling pure electrics.
Compounding this is Canada's worsening economic malaise. Poverty rates, after dipping to 6.4% in 2020, have climbed steadily: 9.9% in 2022, 10.2% in 2023, and projected at 10.9% for 2024. This reversal, driven by inflation, stagnant wages, and post-pandemic benefit cuts, puts the 2030 goal of halving 2015's 14.5% rate in jeopardy. Lower-income households saw disposable income grow just 3.6% in 2024, barely outpacing 2.4% inflation, while inequality hit record highs in Q3 2025. Vulnerable groups—single adults, immigrants, and disabled persons—face rates up to 17.8%, making $50,000+ EVs a luxury few can afford, even with rebates.
Is this strategy anything but an economic disaster for a nation already in decline? With GDP growth sluggish, debt ballooning, and Trump-era tariffs looming, subsidizing a faltering EV market risks wasting billions on unwanted tech. Critics argue it's Trudeau-era policy recycled, propping up foreign manufacturers like Chinese EV makers while ignoring domestic realities. Without genuine demand or affordability fixes, this could accelerate Canada's slide, burdening taxpayers in a country where 41% teeter on financial insolvency. Time will tell if Carney's gamble pays off—or deepens the quagmire.
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