Prime Minister Mark Carney Announces Plan To Strengthen Auto Industry

Last week, Canadian Prime Minister Mark Carney announced a plan to strengthen his country’s automobile industry and speed up the nation’s transition to electric vehicles (EVs). The initiative comes in direct response to 25 percent tariffs that the Trump administration imposed on Canadian cars and car parts.

The plan, which is outlined by the prime minister’s office at this link, calls for strengthening the auto sector, in part, through a series of available fiscal measures that include:

• An accelerated capital cost allowance measure that will allow automotive manufacturers to write off a larger share of the cost of investments in the first year;
• A refundable tax credit that will continue to incentivize large-scale investments by reducing the costs of new machinery and equipment used to manufacture or process key clean technologies, including EV and battery manufacturing;
• Tax incentives and funding to support critical mineral mining and production that will accelerate Canada’s sovereign interests as a global leader in critical minerals; and
• A national strategy regarding artificial intelligence (AI) that will drive AI commercialization and adoption across the industrial economy, including in the connected and autonomous technologies shaping the automotive industry.

In addition to these fiscal measures, the Canadian government will set a sovereign path to reduce emissions from light-duty vehicles (LDVs), setting the course for the intention of more than doubling the stringency of Canada’s greenhouse gas (GHG) emissions standards by 2035. This part of the plan is expected to drive a 75 percent EV adoption rate and provide flexibility in the technologies used to achieve these emission reductions, the prime minister’s office reported. Prime Minister Carney said he hopes to achieve a 90 percent EV adoption rate by 2040.