Canada is postponing a plan that would have required automakers to meet minimum sales levels for electric vehicles (EVs) by 2026. This decision is seen as a concession to manufacturers facing challenges due to tariffs. Prime Minister Mark Carney's government is expected to announce this change on Friday as part of a broader strategy to assist industries impacted by U.S. trade policies.

Previously, under former Prime Minister Justin Trudeau, regulations mandated that at least 20% of vehicle sales be zero-emission by the model year 2026. However, the current government will not enforce this target. Instead, it will initiate a review of the "electric vehicle availability standard" to ensure it does not impose undue burdens on automakers.

This move reflects Carney's efforts to reverse some of Trudeau's policies, influenced by the ongoing trade war. Carney has already lifted several retaliatory tariffs on U.S. goods, eliminated a carbon tax on fossil fuel use, and abandoned a new tax on digital services after complaints from the Trump administration.

The auto industry has been advocating for changes to the EV mandate, arguing that the targets are unrealistic and could jeopardize jobs. In June, only about 8% of new vehicles sold in Canada were zero-emission, a figure that has decreased this year. This decline is attributed to the federal government ending a consumer incentive program that previously offered up to $5,000 for clean-energy vehicle purchases, citing a lack of funds.

The original electric vehicle standard aimed to ensure that by 2035, all new cars and light trucks sold in Canada would be emissions-free. Brian Kingston, CEO of the Canadian Vehicle Manufacturers' Association, criticized the targets, stating, "These targets were made up by the government, not based on any sound assessment of real market dynamics."

The association represents major automakers like General Motors, Ford, and Stellantis, all of which have manufacturing operations in Ontario. Kingston noted that under the previous EV mandate, manufacturers that did not meet sales targets would have had to limit sales of internal combustion engine vehicles or purchase credits from companies like Tesla.

The Canadian auto industry is closely linked to the U.S. market and is currently facing pressures from tariffs imposed by the Trump administration on foreign-made vehicles. Since the trade war began, both GM and Stellantis have reduced production and shifts at their Ontario assembly plants. Automakers globally are grappling with increased costs due to these tariffs, while EV manufacturers are also contending with U.S. efforts to roll back fuel-efficiency standards and eliminate consumer tax credits for EV purchases.