OTTAWA — The federal government announced a suite of policy changes on Thursday in its efforts to get more electric vehicles on the road, while maintaining a sustainable auto sector.
Among the highlights are a return of the popular government rebates program for Canadians to buy EVs, money for charging station infrastructure, and plans to develop a cap-and-trade system to encourage automakers to build more vehicles in Canada.
Here are five take-aways tucked in among the fine print of the announcement.
EV rebates will shrink each year until they’re phased out
The reintroduction of the rebates program largely mirrors its predecessor — known as the incentives for zero-emission vehicles, or iZEV. It will again provide up to $5,000 toward the cost of a new EV.
This time all plug-in hybrids will only receive $2,500 in rebates. Previously, long-range PHEVs got the full $5,000.
The amount of money a car would be eligible for will also decrease yearly. The $5,000 and $2,500 rebate amounts are only good for this year. They will decrease each year by $1,000 and $500 respectively, until they’re eliminated in 2031.
Eligible vehicles must also cost less than $50,000, unless they’re built in Canada — which so far are only the Dodge Charger and the Chrysler Pacifica models.
Right now only about 23 models are eligible for the rebates, but government officials expect more models to be included as automakers lower their prices in order to attract customers eager to take advantage of the rebates.
To be eligible for the rebates, vehicles must be imported from a country with which Canada has free-trade agreements — meaning the planned imports of Chinese EVs won’t be eligible.
The program, set to resume on Feb. 16, will sunset after five years, or when the $2.3 billion allocated for it runs out.
In total, the government is forecasting 840,000 new EVs to hit the road from the new program.
The previous program set aside more than $3 billion over its five-year span, and incented nearly 560,000 vehicles since 2019.
EV uptake
With the new measures, along with other initiatives like the recent EV deals with China and a memorandum of understanding with Korean carmakers, the government is expecting EV uptake to reach 75 per cent by 2035, with the hope of reaching 90 per cent by 2040.
But it’s a steep hill.
In 2024, the final year the rebate was available, sales nationally reached almost 15 per cent.
After the program was paused in January 2025 when its funding ran out, EV sales plunged to as low as 6.5 per cent in March, before slowly creeping back up by a couple percentage points.
The latest figures from Statistics Canada show EVs represented 11.3 per cent of all new vehicle sales in November 2025.
While that’s expected to rise with the reintroduction of the rebates program, sales figures under the previous program never cracked 19 per cent on a monthly basis.
Hampering sales too was the promise from federal ministers that the rebate program would return. But without providing a timeline for it, car dealers reported customers were holding off on buying a new EV, hoping the government would bring the rebates back.
Charging stations abound
The government also kicked up $1.5 billion Thursday as part of its plan to develop a national charging infrastructure strategy.
In a 2021 analysis commissioned by Natural Resources Canada, Montreal-based consultancy Dunsky Energy and Climate estimated Canada needed 52,000 chargers by the end of 2025.
But Canada continues to lag behind.
According to the latest departmental figures, Canada has 38,753 as of today. Last year, the buildup of EV charging ports regressed, with only 6,170 ports built — down from more than 7,000 in both 2024 and 2023.
The bulk of Canada’s charging stations continues to be concentrated in Ontario and Quebec, which together account for 67 per cent of all charging ports across the country.
B.C. has another 20 per cent share, while Alberta is home to 5 per cent of all charging ports.
The announcement didn’t say how many charging ports the government hopes to get out of its $1.5 billion investment, but the nationals strategy aims to better attract private equity.
Canada will maintain counter tariffs on U.S. auto imports
While automakers have said Canada’s retaliatory tariffs are doing damage to the sector’s supply chains, Prime Minister Mark Carney said on Thursday Ottawa’s tariffs on auto imports aren’t going anywhere, as long as U.S. tariffs remain in place.
Canada has a 25 per cent tariff on vehicles coming in from the U.S., in a tit-for-tat on what the Trump administration has levied.
But the government on Thursday signalled its intent to introduce a cap-and-trade system to allow manufacturers to import more vehicles duty-free.
But there’s a catch.
Companies will only earn credits through production and investment in Canada. Those with a surplus of credits will be able to sell them to other companies at a market price.
Right now, companies can import a set number of vehicles tariff-free, so long as they maintain production levels. But the government is trying to incentivize investment in Canada, and allow companies to benefit from increased production and investment.
The government said it plans to launch consultations on the issue.
Tax credits galore
Ottawa also introduced a series of new tax credits for the auto sector on Thursday.
They include a “productivity super deduction” which allows carmakers to write off a larger share of investment costs in the first year.
Another allows companies to write off some of the costs of purchasing new equipment when used to build clean tech — including EVs and batteries.
The federal government also earmarked $3 billion of its strategic response fund to support auto manufacturing, including assembly lines and building car parts.
The fund was announced in the 2025 federal budget, to the tune of $5 billion.
This report by The Canadian Press was first published Feb. 5, 2026.
Nick Murray, The Canadian Press
