Canada's Electric Vehicle Mandate Threatens Auto Industry

As the Canadian auto industry, which generates $38-billion in exports annually and accounts for roughly half a million jobs, faces an existential threat, the blame is not going to U.S. President Donald Trump's automotive tariffs, but rather its own electric vehicle mandate, modeled after California's. The mandate, set to prohibit the sale of internal combustion engine vehicles by 2035, will bankrupt legacy U.S. automakers like General Motors, which has invested heavily in electric vehicles, due to the significant economic costs of producing zero-emission vehicles that are currently priced higher than their internal combustion engine counterparts.

Key Takeaways:

• The Canadian auto industry, which supports half a million jobs and generates $38-billion in exports annually, is threatened not by U.S. President Donald Trump's automotive tariffs, but by Canada's electric vehicle mandate modeled after California's.
• The mandate, set to prohibit the sale of internal combustion engine vehicles by 2035, will likely bankrupt legacy U.S. automakers like General Motors due to the high costs of producing electric vehicles.
• General Motors has admitted slow progress in meeting the 2035 electric vehicle mandate and has allied with Republicans and Democrats in the U.S. House of Representatives to revoke California's emissions mandate.
• A majority of U.S. senators also voted to kill the California mandate, leaving the decision to U.S. President Trump, who is expected to sign the legislation into law soon.
• University of Guelph economist Ross McKitrick has assessed Canada's 2035 federal electric vehicle mandate and concluded that it needs technological advancements to produce price parity between electric and internal combustion engine vehicles to succeed, or it will become a Canadian auto industry killer.
• Prof. McKitrick's economic models indicate that if price parity is delayed for another 15 years or more, Canada's 2035 electric vehicle mandate will "effectively destroy" the Canadian auto industry and cause widespread economic losses.

Statistics:

• The Canadian auto industry supports roughly half a million jobs.
• The Canadian auto industry generates $38-billion in exports annually.
• The 2035 electric vehicle mandate threatens about 4.5 million jobs in the U.S. automotive industry, accounting for almost 3% of the country's non-farm jobs.
• Ford Motor Co. has lost $132,000 on each electric vehicle it sold over the first three months of 2024.
• Prof. McKitrick estimates that the costs per tonne of emissions abated under the 2035 electric vehicle mandate are at least 10 times the Canadian carbon tax rates.

Sources:

• Globe and Mail, John Turley-Ewart
• House Resolution to Revote California's Emissions Mandate, U.S. House of Representatives
• Senate Vote to Kill California's Emissions Mandate, U.S. Senate
• Ross McKitrick, University of Guelph economist
• Ford Motor Co. press release