Changing lanes: Canada proposes to replace its ZEV sales mandate with technology-neutral emission standards

The federal government is proposing to repeal its zero-emission vehicle (ZEV) sales mandate and replace it with future technology-neutral greenhouse gas (GHG) emission standards. On August 15, 2026, it published proposed amendments to the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations that would eliminate the Electric Vehicle Availability Standard (EVAS), which currently requires increasing percentages of new vehicle sales to ZEVs.

The federal government describes this as the first stage of a transition from prescribed ZEV sales percentages to more stringent, Canada-specific GHG performance standards. The proposed standards would be technology neutral, allowing manufacturers greater flexibility in determining how to reduce emissions across their vehicle fleets.

Stakeholders have until October 29, 2026 to submit comments on the proposed amendments. Industry participants should continue complying with existing requirements while monitoring and participating in consultations on the replacement GHG standards.

Key Takeaways

• Canada has proposed repealing the federal Electric Vehicle Availability Standard (EVAS).
• Manufacturers and importers would no longer be subject to federally mandated ZEV sales percentages if the repeal is finalized.
• Existing vehicle GHG emission regulations would remain in force.
• The federal government intends to develop more stringent, technology-neutral GHG performance standards through a separate process.

How would the proposed repeal change current ZEV compliance requirements?

EVAS was introduced in 2023 and requires ZEVs to represent an increasing proportion of the new light-duty vehicles offered for sale in Canada. The requirements begin at 20% for model year 2026, rise to 60% for model year 2030 and reach 100% for model year 2035 and subsequent years.

The proposed amendments would repeal all provisions establishing these requirements. Manufacturers and importers would no longer be required to meet the prescribed ZEV percentages or calculate and report the compliance units and deficits associated with the EVAS credit system.

The amendments would not repeal the broader federal framework regulating GHG emissions from passenger automobiles and light trucks. Fleet-average emission standards, testing requirements, evidence-of-conformity obligations and related reporting requirements would continue to apply. The government is therefore proposing to remove one regulatory mechanism, i.e., the mandated ZEV sales trajectory, while retaining the underlying vehicle emissions regime.

The proposal also contains several administrative amendments in response to the U.S. Environmental Protection Agency’s repeal of federal GHG standards for light-, medium- and heavy-duty vehicles and engines.

Canadian regulations have historically incorporated parts of the U.S. regulatory framework by reference. To avoid those Canadian requirements disappearing or becoming unworkable as a consequence of the U.S. repeal, the amendments would generally “freeze” relevant references to the U.S. Code of Federal Regulations as it read before the repeal. This would preserve the test procedures and calculation methodologies needed to administer Canada’s remaining standards.

Why is Canada proposing to repeal the ZEV sales mandate?

In its Regulatory Impact Analysis Statement, the federal government points to a combination of declining Canadian ZEV sales, affordability concerns, insufficient charging infrastructure and significant uncertainty within the integrated North American automotive market.

ZEVs accounted for approximately 14% of Canadian new vehicle sales in 2024, but that share fell to approximately 9% in 2025. Sales began to recover in early 2026, averaging approximately 10% between January and April, but remained well below the 20% EVAS requirement for model year 2026 vehicles.

The federal government also places considerable weight on changing U.S. policy and trade conditions. Canada’s automotive sector is highly integrated with the U.S., with more than 90% of Canadian-made vehicles and approximately 60% of Canadian-made parts destined for south of the border. U.S. tariffs on vehicles and production inputs, together with the withdrawal of U.S. support for vehicle electrification, have increased the cost and complexity of complying with a uniquely Canadian ZEV mandate. These considerations led the federal government to conclude that retaining EVAS could constrain vehicle supply, increase costs, and place Canadian automotive manufacturing, investment and employment at risk.

In September 2025, Environment and Climate Change Canada (ECCC) initiated a 60-day review of EVAS and consulted with non-governmental organizations, industry associations, automotive manufacturers, other government departments, Indigenous organizations and the provinces/territories.

Based on feedback received by ECCC, most traditional manufacturers and industry associations preferred performance-based GHG standards, while some recommended delaying or reducing the ZEV requirements. Environmental organizations and EV-only importers generally placed greater emphasis on retaining a binding framework that would ensure the availability and affordability of ZEVs in Canada. Provinces, territories and Indigenous governments also raised practical concerns regarding affordability, charging infrastructure, grid readiness, long travel distances, and conditions in rural, northern and remote communities.

What will replace the ZEV sales mandate?

The proposed repeal forms part of the federal government’s broader Automotive Strategy, which was announced in February 2026 in response to trade disruption, technological change and competitive pressures facing Canada’s automotive sector.

The strategy combines support for domestic manufacturing and workers with measures to stimulate EV demand and diversify Canada’s trading relationships.

Key initiatives include:

• $3 billion for automotive investment through the Strategic Response Fund;
• a five-year $2.3 billion EV Affordability Program;
• $1.5 billion for charging and hydrogen refuelling infrastructure; and
• changes to Canada’s tariff-remission framework intended to reward domestic production and investment.

From a regulatory perspective, the strategy proposes replacing EVAS with stronger, technology-neutral GHG standards designed to support goals of 75% EV sales by 2035 and 90% by 2040.

Taken together, the measures reflect an effort to align Canada’s electrification objectives more closely with its industrial and trade priorities with a view to boosting economic resilience. The design, stringency, compliance options and timing of the replacement standards are yet to be determined through a separate regulatory and consultation process.

As Canada looks to chart a more independent course on vehicle emission regulations, future Canadian GHG standards will need to balance climate and electrification objectives, with the need for flexibility and predictability in an automotive sector already facing cost, investment and supply-chain pressures.

The purpose of a technology-neutral fleet standard is to regulate the emissions outcome rather than requiring manufacturers to sell a prescribed percentage of particular vehicle technologies. Depending on its design, the standard could permit compliance through a combination of battery-electric vehicles, plug-in and conventional hybrids, more efficient internal combustion vehicles and other lower-emission technologies.

This flexibility may be especially valuable in the near term, when consumer demand, charging access and vehicle suitability vary considerably across Canada. It may also give manufacturers more room to manage product planning within the North American market. At the same time, technology neutrality does not guarantee that future standards will be less demanding. A sufficiently stringent fleet-average standard could still drive substantial electrification, although less directly and with potentially less certainty than a sales mandate.

Projected economic and environmental impacts of repealing EVAS

The federal government’s own regulatory analysis is candid about the environmental consequences of repealing EVAS before replacement standards are in place. Relative to maintaining the existing requirements, the repeal is projected to result in 326 megatonnes (Mt) of forgone GHG emission reductions between 2026 and 2050. The government values the associated potential climate damages at approximately $94.2 billion.

In the federal government’s cost-benefit analysis, vehicle purchasers would avoid an estimated $57.6 billion in higher vehicle and home-charger costs, but would forgo approximately $53.8 billion in energy savings. Maintenance savings associated with electric vehicle ownership and the health benefits of reduced air pollution were not monetized.

Overall, the federal government estimates a net societal cost of approximately $90.3 billion from the repeal when assessed independently of the future replacement standards. The proposed enhanced GHG standards could preserve approximately 145 Mt of the otherwise forgone reductions. However, this estimate is only illustrative. The actual environmental outcome will depend on standards that have not yet been proposed or designed.

This creates an implementation gap between the two policies. On the one hand, the federal government’s position is that EVAS must be removed promptly to provide industry certainty. On the other hand, more complex Canada-specific standards require further analysis and consultation.

From a climate policy perspective, the credibility of the new approach will depend on how quickly the replacement regulations are developed and whether their stringency is sufficient to produce the anticipated emissions reductions.

What should automotive manufacturers and importers do next?

The proposed amendments provide immediate direction on EVAS, but regulatory uncertainty remains. Automotive manufacturers and importers should continue complying with the existing regulations until the repeal is finalized and registered. They should also prepare to participate in consultations on the replacement GHG standards, including their stringency, lead time, credit mechanisms, treatment of different technologies and interaction with provincial ZEV regimes.

Provincial requirements also have an important role. Repealing EVAS would remove the federal mandate, but it would not displace ZEV requirements maintained by provinces such as British Columbia or Québec. Manufacturers may therefore continue to face different obligations across Canada, making federal-provincial coordination a key issue in the next stage of regulatory development.

The broader automotive strategy will also continue to impact market developments. In particular, consumer incentives, charging infrastructure, electricity system readiness, tariffs and industrial investment policies will influence ZEV adoption alongside regulation. The experience of the past several years suggests that a sales requirement cannot be considered in isolation from the market conditions needed to support it.

Ultimately, the proposed amendments mark a shift in regulatory approach rather than the end of Canada’s vehicle-electrification policy. The government is trading the certainty of prescribed ZEV sales percentages for the flexibility of performance-based standards. Whether that approach successfully balances competitiveness, consumer choice and meaningful emission reductions will depend on the details and timing of the regulatory framework that follows.

The proposed amendments are open for public comment for 75 days following their August 15, 2026 publication. Comments can be submitted until October 29, 2026 on the Comment on Proposed Regulations website.

Our team continues to monitor developments in this fast-evolving space and we regularly advise clients on environmental, regulatory and trade considerations relevant to the Canadian automotive sector. Please do not hesitate to reach out to our team with any questions on these issues.