Automakers ask Carney to repeal zero-emission vehicle mandate

Globe and Mail

2 days ago

Auto sector chief executives urged Prime Minister Mark Carney Wednesday during a meeting on the Canada-U.S. trade war to repeal federal regulations that require one in five vehicles sold starting in 2026 to be zero-emission models.
The CEOs of Ford Motor Company of Canada F-N, General Motors of Canada Co. GM-N and Stellantis Canada STLA-N met with Mr. Carney in Ottawa as the Canadian and U.S. governments try to reach a trade deal by July 21 that might end Washington's tariffs on Canadian-made automobiles, among other levies.
Automakers are warning that electric-vehicle sales in Canada are waning this year and it would be impossible to reach the zero-emission vehicle (ZEV) mandate targets that take effect starting in 2026.
Brian Kingston, president of the Canadian Vehicle Manufacturers' Association – which includes Ford, General Motors and Stellantis – said two key issues discussed at the meeting were trade policy and the federal ZEV sales mandate.
'At a time when the auto industry is under immense pressure, it is more important than ever that the damaging and redundant ZEV mandate be urgently removed,' Mr. Kingston said in a statement. 'Canada's longest established automakers appreciated the candid discussion with the Prime Minister and look forward to collaborating to protect and grow this critical industry,' he said.
According to a controversial policy Ottawa announced in 2022, by next year 20 per cent of Canadian car sales must be powered by a battery, fuel cell or plug-in hybrid system. This rises to 60 per cent by 2030 and 100 per cent by 2035.
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The program includes credits for manufacturers, which are earned by exceeding ZEV targets and can be banked to meet future mandates or traded. Credits are also earned by investing in charging stations. Companies that do not meet the targets fall into a deficit that must be cleared up within three years.
The automakers say that missing their targets would mean limiting the availability of internal combustion vehicles to remain in compliance or purchasing credits from companies such as Tesla TSLA-Q.
Automakers say they won't be able to meet next year's target, and that consumers – not government – should decide what is available on the car lots.
Flavio Volpe, president of the Automotive Parts Manufacturers' Association, was not at Wednesday's meeting with Mr. Carney.
But he said indications are that the trade war between Canada and the United States is hurting vehicle production in Canada.
'The half of the auto parts that leave Canadian factories, that go into Canadian assembly, those orders are down by a quarter to one third,' he said.
'There's a lot of anxiety in the business right now.'
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He said Ottawa shouldn't be heaping further pain on automakers who are already suffering under the Canada-U.S. strife.
'How are we going to avoid punishing the same companies who are getting punished in this trade war?'
Canada is grappling with Mr. Trump's 50-per-cent tariffs on steel and aluminum, and a 25-per-cent tariff on autos. In addition, Canada faces 25-per-cent levies on anything not traded under the United States-Mexico-Canada Agreement, with the exception of oil, gas and potash, which are taxed at 10 per cent. Canada's retaliatory tariffs include levies on U.S.-made autos.
Last year, EVs accounted for 13.8 per cent of total vehicles sold, according to Statistics Canada. In March of this year, EV sales fell by 45 per cent from a year ago for a total share of 6.5 per cent, driven down by the loss of provincial and federal incentives, high prices and fears over a lack of charging stations, even as overall car sales rose.
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The federal government in January halted its EV incentives for car buyers, but says it plans to reinstate them. Under the program, car buyers received $5,000 rebates for zero-emissions vehicles and $2,500 for hybrid gas-electric vehicles.
Quebec is phasing out its incentive plan while Ontario cancelled its plan in 2018.
In the U.S., the world's second-largest car market, President Donald Trump eliminated the country's EV mandate and federal support for buyers. He also blocked California's efforts to mandate EV sales and set tailpipe emissions regulations.
The drop in demand for EVs has prompted car makers to rethink their manufacturing and investing strategies.
Honda Canada HMC-N recently postponed its $15-billion EV and battery project in Ontario, and Stellantis NV delayed production of the electric Dodge Charger R/T at its plant in Windsor, Ont.
Ford Motor Co. scrubbed plans last year to make EVs in Oakville, instead planning to produce gas-powered pickup trucks when the factory reopens.