Prime Minister Carney Announces Federal Auto Strategy

This morning, Prime Minister Mark Carney delivered remarks outlining the federal government’s new Auto Strategy during a visit to Martinrea’s facility in Vaughan. The announcement comes at a time of continued uncertainty in the North American auto sector, driven by U.S. tariff measures and broader global shifts toward electrification and advanced vehicle technologies. The federal plan introduces substantial new investment supports, regulatory adjustments, and potential changes to trade policy. While the government presented these measures as steps to reinforce domestic capacity, many program and regulatory details have yet to be released.

Context

‍U.S. tariffs have disrupted long‑standing supply chains, creating risks for Canadian auto workers and manufacturers. At the same time, global automakers are adjusting production models amid accelerating electrification and automation. Canada continues to highlight its clean grid, established OEM and supplier base, and skilled workforce as competitive assets. The federal government framed today’s announcement as an effort to reduce exposure to external policy shocks and respond to the broader sectoral transition.

What Was Announced

‍The federal strategy is structured around five pillars and combines financial incentives, regulatory changes, and potential trade mechanisms.  

1. Investment Supports Across the Auto Supply Chain
   
   The government is allocating $3 billion through the Strategic Response Fund to support firms facing trade disruptions, along with $100 million for productivity and retooling through the Regional Tariff Response Initiative. It is also introducing the “Productivity Super‑Deduction,” an immediate expensing measure for eligible capital investments. Adjustments will be made to existing clean‑energy, clean‑technology, and critical‑minerals tax credits. Buy Canadian preferences will be reinforced in procurement.
   
2. New Vehicle Emissions Framework
   
   The Electric Vehicle Availability Standard will be replaced by emissions standards that give manufacturers more compliance options. A new federal framework for reducing vehicle emissions will seek to more than double the stringency of vehicle greenhouse gas standards by 2035, establishing a long-term objective comparable to emissions reductions associated with a 75 percent electric vehicle adoption rate by 2035, and 90 percent by 2040.
   
3. Measures to Stimulate EV Demand
   
   The government is launching a $2.3 billion EV Affordability Program that provides up to $5,000 for battery‑electric or fuel‑cell vehicles and up to $2,500 for plug‑in hybrids. The $50,000 price cap would not apply to Canadian‑made EVs. Incentives will be limited to vehicles produced in countries with which Canada has a free‑trade agreement. A National Charging Infrastructure Strategy will be developed, supported by $1.5 billion in financing through the Canada Infrastructure Bank.
   
4. Proposed Trade and Market-Access Measures
   
   Canada continues to signal support for a zero‑tariff North American auto market but is preparing alternatives should U.S. tariffs remain in place. The government is considering strengthening the automotive remission framework and exploring a tradable‑credit system that would require companies to earn credits through domestic production or purchase them if they wish to sell imported vehicles in Canada. The announcement also highlighted ongoing trade‑diversification initiatives, including recent agreements and partnerships.
   
5. Supports for Workers and Industry Adjustments
   
   The government outlined initiatives such as a Work‑Sharing grant to help prevent layoffs and the creation of a Workforce Alliance to address skills gaps. A federal‑Ontario Automotive Task Force will coordinate on issues including supply chains and innovation. The government reiterated its view that existing trade‑resilience measures have supported employment and unlocked private investment, although granular program information remains limited

Strategic Considerations for Stakeholders

For manufacturers and suppliers, the capital‑investment incentives may influence decisions on retooling, supply‑chain adjustments, and long‑term product planning. EV and charging network operators may see expanded opportunities depending on program design and rollout timelines, but less certainty with respect to EV deployment and charging network utilization. Labour organizations and training partners may find new avenues for transition supports, though specific parameters are still forthcoming. International automakers may need to adapt market‑entry and compliance strategies depending on how the proposed credit‑based trade system evolves.

What to Watch

Key forthcoming elements include the release of the Federal Electricity Strategy, draft regulations for the new vehicle emissions framework, detailed program design for federal EV incentives and charging‑infrastructure funding, and further clarification of the proposed credit system.

Sussex Assessment

The announcement signals a broad set of federal actions intended to navigate both trade‑related uncertainty and long‑term structural changes in the auto sector. While the government presented today’s plan as an effort to strengthen domestic competitiveness, many core elements, particularly on regulatory implementation and trade‑compliance mechanisms, remain to be defined. Stakeholders should monitor how federal–provincial coordination unfolds and how stakeholder feedback shapes forthcoming program details.