It will be important for dealers to follow the early signs from Ottawa
As Parliament returns this fall, Canadian auto dealers should be paying close attention to a political season that promises to be pertinent, in important ways, to our industry.
Now, the headlines in early fall will inevitably focus on the government’s fiscal direction and its relationship with the United States, but beneath those currents, one policy decision has already set the tone for the coming months: Prime Minister Carney’s announcement that model year 2026 vehicles will be exempt from the federal zero-emission vehicle (ZEV) mandate.
As I alluded to in my last column, the ongoing EV discussion was set to become one of the main themes of the ever-spinning rumour mill in Ottawa.
Well, the announcement was proof that the Liberals wanted to limit the political zeal of Conservative party on this topic, considering they had made the EV mandate their target during the summer and were surely prepared to fight it in the House.
The rationale behind the 2026 pause is being framed in part as a response to trade realities.
Ottawa’s decision to review its own ZEV standard is therefore not only a domestic policy adjustment but also a recognition that Canadian dealers and manufacturers cannot operate in isolation from U.S. market dynamics.
How this relationship evolves over the coming months, particularly in the context of volatile trade negotiations, influences the operating environment for dealers well beyond the ZEV file.
Some manufacturers have already focused EV allocations in provinces with mandates, leaving dealers in other jurisdictions with fewer models to offer.
This pause removes the immediate pressure of having to meet the original requirement that 20 per cent of new light-duty vehicles sold next year be zero-emission. In doing so, it brings short-term clarity for dealers but also opens new uncertainties about what comes next.
Carney’s decision also came with the promise of a 60-day review of the program, a review that will weigh affordability, consumer choice, and the realities of infrastructure against the government’s broader environmental objectives, emission reduction and international leadership on the matter.
In fact, for the industry, this decision helps avoid an immediate crisis of supply and availability, but questions will continue to linger about how future targets will be structured — if they are maintained — and whether the revised approach will provide stability or simply shift the pressure into later years.
This is particularly relevant as provinces like British Columbia and Quebec continue to operate under their own stringent requirements. The result is an ongoing patchwork of standards across the country that could create real disparities in how vehicles are distributed and in the rate at which Canadians integrate this technology to their personal routines.
Some manufacturers have already focused EV allocations in provinces with mandates, leaving dealers in other jurisdictions with fewer models to offer. If provincial and federal rules remain out of sync, dealers may face significant internal trade barriers and operational challenges.
This divergence in policy direction is not just a technical issue. It carries political weight inside the Liberal caucus, particularly among MPs representing rural ridings.
Specifically on the EV topic, some MPs have been raising concerns that their regions lack the infrastructure and consumer base to keep pace with ambitious EV targets, and that Ottawa’s agenda is heavily tailored to urban realities more than the needs of smaller communities, where distances are longer and charging networks sparse. It will be interesting to see if internal misalignment helps amplify the automotive industry’s arguments within the Liberal caucus.
More generally, there also have been rumours of Liberal MPs being somewhat discontent about the focus, by the leadership, on important high-level items such as fast-tracking high-priority infrastructure projects and an increase in defense spending rather than prioritizing issues closer to Canadians; issues that notably have helped the Conservatives in gaining electoral ground with Canadians.
The Prime Minister ran on such a platform and so there is no surprise there but — even with a strong minority — it will be key for Prime Minister Carney to have a good balance between long-term and short-term usage of his political capital, as he’ll rapidly figure out the whimsical nature of both public opinion and internal party support.
These macro projects are rooted in significant cross-party support and have been in a way greenlit by the recent elections, but their outputs won’t be observed for many years, leaving this current government in front of current and daily challenges that need fixing.
This is exactly why this fall in Ottawa will be thoroughly shaped by the government’s budget, the first full economic plan under Carney’s stewardship.
This is the first exercise, under the scrutiny of the House, where he’ll try to land this balance while managing an already important deficit. While it will probably feel like tightrope walking to him and his team, Canadians will see this as exactly why he was elected in the first place, when his credentials and professional experience helped the Liberals secure a win.
Expectations are high that it will attempt to provide some certainty to investors and businesses after a turbulent period marked by trade disputes, tariff threats, and regulatory shifts.
The government has signaled that housing and defence spending will take centre stage, but for the auto sector, the key question is whether the budget will lay out a credible path on competitiveness, infrastructure, and regulatory clarity.
In that process, automotive dealers should pay close attention whether the government chooses to reinstate its consumer incentives for ZEV purchases, how it continues to treat import tariffs on vehicles and parts, and whether funding for charging networks and energy infrastructure is scaled to meet real-world demand.
With affordability remaining a top concern for Canadian households, the government faces pressure to ensure that the transition to cleaner transportation does not further squeeze consumers who are already wary of high prices — yet another example of the aforementioned tightrope.
Put together, these dynamics point to a fall session that is less about sweeping new announcements and more about recalibration. The government is trying to reconcile climate ambitions with economic realities, rural concerns with urban priorities, and national goals with international pressures.
A complicated task for sure, but an important one — and that is why it’ll be key to follow what is happening. The way Parliament navigates these debates this fall will shape not only the direction of Canada’s auto sector but also the everyday operations of dealerships across the country.
