Prime Minister Carney launches new strategy to transform Canada's auto industry

VAUGHAN, ON, Feb. 5, 2026 /CNW/ - The world is changing rapidly, fundamentally reshaping trade relationships and leaving economies, businesses, and workers under a cloud of uncertainty. Canada's automotive industry is on the frontline of this shift, with more than 90% of Canadian-made vehicles and 60% of Canadian-made auto parts currently exported to the U.S.

Canada's new government is focused on what we can control – implementing a new industrial strategy. We are transforming our economy from one that is reliant on a single trade partner to one that is more resilient to global shocks – a stronger, more sustainable, more independent economy built on the solid foundation of strong Canadian industries and bolstered by diverse international trade partners. In parallel, the government is launching a national electricity strategy to leverage our energy advantage to provide clean, affordable, and reliable power to Canadians.

These shifts present a unique opportunity to transform Canada's auto industry. To that end, the government is introducing a new auto strategy that rewards the production of made-in-Canada vehicles and harnesses our world-class capabilities in artificial intelligence and technology expertise to build the cars of the future. This is a strategy that positions Canada to become a global leader in electric vehicle (EV) production.

Today, the Prime Minister, Mark Carney, announced the following new measures:

1.To accelerate investment in Canada's auto manufacturing sector, Canada's new government will:

• Allocate $3 billion from the Strategic Response Fund and up to $100 million from the Regional Tariff Response Initiative to help the auto industry adapt, grow, and diversify to new markets.
• Harness the Productivity Super-Deduction and reduced corporate tax rates for zero-emission technology manufacturers to encourage investment in clean technologies and EVs.

2.To rationalise emissions reduction policies to focus on outcomes that matter to Canadians, Canada's new government will:

• Introduce stronger greenhouse gas emission standards that put Canada on a path to achieve a goal of 75% EV sales by 2035 and 90% EV sales by 2040 – reducing our carbon footprint and securing Canada's global leadership in clean energy.
• These more stringent emissions standards will enable the Government of Canada to repeal the Electric Vehicle Accessibility Standard. This approach will allow manufacturers to use a wide array of technologies to meet the standards and respond to consumer preferences in the near-term, while driving EV adoption over time.

3.To strengthen domestic demand by making EVs more affordable and reliable for Canadians, Canada's new government will:

• Launch a five-year EV Affordability Program to lower the cost of EVs for Canadians and create a stronger domestic consumer market.
  • The new $2.3 billion program will offer individuals and businesses purchase or lease incentives of up to $5,000 for battery electric and fuel EVs, and up to $2,500 for plug-in hybrids (PHEVs) with a final transaction value of up to $50,000 on cars made by countries Canada has free trade agreements with. To support the Canadian automotive industry, this $50,000 cap will not apply to Canadian-made EVs and PHEVs.
• Enhance our national EV charging network through investments of $1.5 billion through the Canada Infrastructure Bank's Charging and Hydrogen Refueling Infrastructure Initiative, making it easier and more convenient for drivers to charge their EVs across the country.

4.To establish a comprehensive trade regime that strengthens the competitiveness of the auto sector, Canada's new government will:

• Strengthen Canada's automotive remission framework to reward companies that produce and invest in Canada.
• Maintain counter-tariffs on auto imports from the United States to ensure a level playing field for Canadian automotive manufacturers in the domestic market.
• Canada recently deepened its strategic partnership with the Republic of Korea by signing a memorandum of understanding (MOU) to strengthen Canada-Korea industrial collaboration for future mobility. This builds on other MOUs that Canada has signed with global automakers to promote cooperation.
• Canada has also agreed to a new strategic partnership with China, a global leader in EV manufacturing, to further diversify trade and catalyse new investment in the automotive sector. The recently announced partnership will look to drive new Chinese joint venture investment in Canada and allow for a fixed volume of Chinese EV imports into the Canadian market.

5.To protect Canadian auto workers and businesses from immediate pressures while helping them bridge them to the future, Canada's new government will:

• Provide support to employees through a new Work-Sharing grant – preventing layoffs and supporting worker retention so businesses can plan for the future.
• Establish a new workforce alliance of industry, labour, and training partners to address bottlenecks and catalyse private investment.
• Provide employment assistance and reskilling supports for up to 66,000 workers across Canada, including for displaced auto workers, with a $570 million investment.

Canada's new government will leverage our new and existing trade agreements – including our recent EV arrangement with China – to catalyse massive new investment in the sector, diversify Canada's auto export markets, and position Canada as a global leader in EVs. Canadian workers and industries are well equipped to seize this opportunity, and our government is making generational investments in critical minerals, including those essential for batteries, to secure our place in the world's most important supply chains.

The choices we make now will shape the Canadian auto industry for decades to come. By protecting the industry and incentivising automakers to build here, we can transform Canada's workers and businesses to compete and win in this new global environment.

Today's measures build on previously announced initiatives to help transform strategic Canadian industries, including steel and softwood lumber. Together, they form an ambitious industrial strategy that will build a stronger, more resilient, more independent Canadian economy, and ensure workers and industries can bridge to that future and seize its opportunities.

Quotes

"Canada's new government is fundamentally transforming our economy – from one reliant on a single trade partner, to one that is stronger, more independent, and more resilient to global shocks. We are making strategic decisions and generational investments to build a strong Canadian auto sector, where Canadian workers build the cars of the future."

-- The Rt. Hon. Mark Carney, Prime Minister of Canada

"Canada is an auto nation and home to world-class vehicle manufacturers. We have the cutting-edge technology, the world-class talent, and the resources to make Canada's auto industry a global competitor. Our government's new auto strategy will position Canada to not simply participate in the future of autos, but build the best cars in the world, for the world."

-- The Hon. Mélanie Joly, Minister of Industry and Minister responsible for Canada Economic Development for Quebec Regions

"Supporting our auto industry to compete and succeed in a rapidly changing global economy is a win for all Canadians. By strengthening greenhouse gas emissions standards and backing Canadian workers to build cleaner and more efficient vehicles, we are reducing pollution at the source while meeting growing global demand for EVs. Canada's auto strategy drives down emissions by accelerating the shift to low and zero-emission vehicles, attracting investment in the clean economy, and lowering costs for drivers through improved efficiency, lower fuelling costs, and smart incentives. This is how we cut emissions, create good jobs, drive toward an electric future, and build Canada strong."

-- The Hon. Julie Dabrusin, Minister of the Environment, Climate Change and Nature

"Canadian auto workers are among the best in the world. Their expertise is our competitive advantage. This strategy is about backing those workers with the training, investment, and certainty they need to build the future of the auto sector in Canada. By investing in people, we are securing good jobs, growing our economy, and making sure Canada remains a global leader in automotive manufacturing."

-- The Hon. Patty Hajdu, Minister of Jobs and Families and Minister responsible for the Federal Economic Development Agency for Northern Ontario

Quick facts

• Canada's auto sector supports over 500,000 workers, contributes over $16 billion annually to Canada's GDP, and is one of the country's largest export industries. In 2025, Canada produced over 1.2 million passenger vehicles.
• With over 90% of Canadian-made vehicles and 60% of Canadian-made parts exported to the United States, U.S. automotive tariffs are threatening Canada's automotive manufacturing industry and the 125,000 direct jobs it supports.
• Since April 2025, Canadian-made vehicles have faced a 25% U.S. tariff on non-U.S. content (the value of U.S. content in CUSMA-compliant autos is exempt).
• Within five years, EV sales are projected to reach nearly 40% of global car sales.

This document is also available at https://pm.gc.ca

SOURCE Prime Minister's Office

PMO Media Relations: [email protected]