Canada puts the brakes on electric cars

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Canada is putting the brakes on the switch to electric cars. The minimum quota of 20 percent planned for next year is being suspended. In addition, the Canadian version of a ban on combustion engines, which is set for 2035, will be put to the test. The government is consulting its citizens on this, which will take 60 days.

This was announced by the government on Friday. The reason given is the high tariffs imposed by US President Donald Trump, which also affect the large Canadian automotive industry. Conversely, Canada's import duties for Chinese electric cars could be abolished. Canada's unemployment rate has reached its highest level in ten years, not including the period of COVID-19 restrictions.

Canada's government is also announcing new subsidies and regulations for biodiesel and renewable diesel. Two foreign measures are having an impact here: The US recently restricted its biodiesel subsidies to domestically produced fuel, eliminating this export market for Canada. In March, the People's Republic of China introduced a 100 percent import duty on Canadian rapeseed oil and rapeseed meal, followed by a provisional duty of 75.8 percent on rapeseed in August. This is Beijing's response to the 100 percent tariff imposed by Ottawa on imports of Chinese electric cars, which also impacts Tesla vehicles manufactured in China. This import duty is now also being reviewed and could be dropped.

To prevent the closure of Canadian biodiesel refineries and to support farmers, fuel regulations are now to be adjusted so that more biodiesel is consumed domestically and the calculated CO₂ emissions are reduced. The government also wants the provinces and territories of the monarchy to support complementary measures. Over the next two years, refineries can apply for a subsidy per liter of biodiesel or renewable diesel; the funding pot is endowed with a total of 370 million Canadian dollars (just over 228 million euros).

E-car quotas and climate targets

In model year 2026, 20 percent of all new two-lane vehicles up to 3,856 kilograms in weight sold in Canada should be zero-emission vehicles (ZEV), which includes both zero-emission (with battery or fuel cell) and plug-in hybrids. By 2030, the proportion should rise to 60 percent, and by 2035 to 100 percent. According to the regulations, manufacturers can summarize their sales figures over three years. If they still do not meet the targets, they can buy certificates from competitors who exceed the targets. Alternatively, they could invest 20,000 Canadian dollars (currently around 12,350 euros) in charging infrastructure or pay a penalty for each low-emission vehicle sold.

All of this is now in question. In any case, no quota will apply next year. What happens after that will be decided once the consultation has been completed. This means that the stricter electric car targets of the provinces of British Columbia and Quebec and the national CO₂ targets for 2030 and 2035 are also in doubt. Greenhouse gas emissions should fall by 40 to 45 percent below the 2025 level by 2030 and by a further five percentage points by 2035.

During a television appearance on Sunday, Industry Minister Melanie Joly did not want to admit that these climate targets still apply. The environment minister is responsible for this. “What I can tell you … is that you have seen the labor market figures,” said the industry minister. “We need to make sure that we are there for the auto sector as we continue to pursue very ambitious climate change targets, so make sure that we reduce emissions,” she added. In any case, the Liberal minority government is not backing away from its plan to make Canada climate-neutral by 2050.

Electric car sales have fallen sharply

In the fourth quarter of 2024, ZEVs achieved a market share of 18.3 percent of new cars in Canada and almost 40 percent in Quebec. The francophone province enticed with low electricity prices and additional electric car subsidies. However, the budget for the federal subsidies was exhausted at the beginning of 2025, and Quebec paused its support in February and March. This caused the ZEV market share to slump to 8.7 percent at the federal level in the first quarter and to 13.2 percent in Quebec. The shares are likely to have been even lower in the second quarter.

Electric car subsidies have been available again in Quebec since April, but to a lesser extent. In mid-May, British Columbia paused the support program that had been running since 2011. Both provinces have stricter requirements for the sale of new electric cars than the federal level. Québec already relaxed its requirements two months ago and could now reduce them further; the British Columbia government, for its part, has held out the prospect of reductions: the Pacific province's minimum quota of 90 percent ZEV new cars in 2030 is “obviously not in line with current conditions,” said its Energy Minister Adrian Dix on Friday, “so we need to change those targets.” The changes have been in preparation at the ministry for months.