Canada lays out plan to phase out sales of gas-powered cars, trucks by 2035

The end of the road is coming for gas-powered vehicles in Canada.

New regulations being published this week by Environment Minister Steven Guilbeault will effectively end the sale of new passenger vehicles powered only by gasoline or diesel in 2035.

Guilbeault said the Electric Vehicle Availability Standard will encourage automakers to make more battery-powered cars and trucks available in Canada.

“There’s no mistaking it. We are at a tipping point,” he said, noting sizable growth in EV sales in Canada and demand that has previously outstripped the available supply.

Automakers will have the next 12 years to phase out combustion engine cars, trucks and SUVs with a requirement to gradually increase the proportion of electric models they offer for sale each year.

The electric-vehicle sales mandate regulations will be published later this week. They are setting up a system in which every automaker will have to show that a minimum percentage of vehicles they offer for sale are fully electric or longer-range plug-in hybrids.

It will start with 20 per cent in 2026 and rise slightly to 23 per cent in 2027. After that, the increase share of EVs will begin to jump much faster, so that by 2028, 34 per cent of all vehicles sold need to be electric, 43 per cent in 2029 and 60 per cent in 2030.

That number keeps rising until it hits 100 per cent in 2035.

“Two provinces are already above the 20 per cent threshold – Quebec and British Columbia,” Guilbeault said at a press conference in Toronto, suggesting all provinces should get “on board” with the EV plans.

“The federal government is making multi-billion-dollar investments in the EV supply chain (in Ontario). There’s no reason the government of Ontario shouldn’t do what the government of B.C. is doing, or Nova Scotia, Prince Edward Island and Quebec,” he said, noting those provinces have done more to incentivize the purchase of electric vehicles.

Guilbeault added that the federal government would welcome Ontario resuming the EV rebate program that had been in place under the provincial Liberals until Premier Doug Ford’s government dismantled it in 2018.

When it comes to charging stations at multi-unit buildings, Guilbeault said the government is working on the revision of the national building code.

The updated code would ensure that residential buildings constructed after 2025 have the electric capacity to accommodate the charging stations.

In the first three months of this year, about one in 10 new vehicles registered were electric, suggesting EV sales need to double within the next three years.

They already doubled in the last three years, growing from 38,425 EVs sold in the first nine months of 2020 to 132,783 in the first nine months of 2023.

The policy will be regulated under the Canadian Environmental Protection Act and issue credits to automakers for the EVs they sell.

Generally, a fully electric model will generate one credit, with plug-in hybrids getting partial or full credit depending on how far they can go on a single charge.

Manufacturers that sell more EVs than they need to meet each year’s target can either bank those credits to meet their targets in future years, or sell them to companies that didn’t sell enough.

They can also cover up to 10 per cent of the credits they need each year by investing in public fast-charging stations. Every $20,000 spent on DC fast chargers that are operating before 2027 can earn the equivalent of one credit.

Automakers that come up short of their sales requirements will be able to cover the difference by buying credits from others who exceed their targets or by investing in charging stations.

Automakers can start earning some credits toward their 2026 and 2027 targets over the next two years, in a bid by the government to encourage a faster transition.