Prime Minister Mark Carney has decided to cancel a mandate requiring that 20% of all new car sales in Canada be zero-emission vehicles starting next year. Current sales of electric vehicles (EVs) are less than half of that target. This decision highlights deeper issues regarding government spending and the future of the EV industry in Canada.

According to the Parliamentary Budget Office, federal and provincial governments, particularly in Ontario and Quebec, have allocated up to $52.5 billion to support 13 major projects in the EV supply chain. This amount exceeds the $46.1 billion that the EV industry is investing in itself by 14%. Although most of these subsidies have not yet been disbursed, taxpayers have a significant financial stake in the success of the EV sector. Some projects are already facing delays due to lower-than-expected sales, which are attributed to higher consumer costs compared to traditional internal combustion engine vehicles, a lack of public charging stations, and reduced vehicle range in cold weather.

The situation has been further complicated by U.S. tariffs and the abandonment of subsidies for the American EV sector, which were previously approved by President Joe Biden. This uncertainty raises questions about the future of Canada's EV industry. Carney suggested that reinstating federal subsidies of up to $5,000 for qualifying EV buyers could help boost sales. These subsidies were suspended earlier this year, although the government has promised to reintroduce them.

When announcing the cancellation of the 20% sales mandate, Carney stated that the government would conduct a 60-day review of future mandates, including a proposed 60% target for new car sales to be EVs by 2030 and a 100% target by 2035. He emphasized the need to consider potential amendments to these targets and explore additional flexibilities to ensure that government programs align with market realities and do not impose undue burdens on automakers.

This decision also reflects a response to declining public interest in EVs amid economic uncertainty, rising unemployment, and cost-of-living concerns. Carney is addressing warnings from the auto sector that the previous EV mandates could further harm Canada’s struggling automotive industry, which supports nearly 550,000 jobs.

While Carney's cancellation of the consumer carbon tax and the postponement of the EV sales mandate are seen as positive steps, they are viewed as minor compared to the broader issues at hand. These actions are part of over 140 federal programs that have committed more than $200 billion to combat climate change. However, independent evaluations have indicated that these initiatives are unlikely to meet Canada’s emissions reduction targets of at least 40% below 2005 levels by 2030 and achieving net-zero emissions by 2050. As of 2023, emissions had only decreased by 8.5%.

The unrealistic federal targets have led to costly policies, such as the now-canceled EV sales mandate. A report from the federal environment commissioner revealed that the government's lack of transparency has made it difficult for citizens to trust claims about emissions reductions. Of 20 government measures reviewed, only nine were on track to meet their goals. Furthermore, an investigation into the Sustainable Development Technology Fund found numerous instances of conflict-of-interest violations and funding awarded to ineligible projects.

Carney's cancellation of the EV sales mandate is a small step toward addressing these issues, but without further action, it may not be enough to protect taxpayers from potential financial challenges.