Canadian Prime Minister Mark Carney is reportedly rethinking the country's aggressive electric vehicle push, and the auto industry is watching closely.

A More Flexible Approach

According to CBC reporting on Wednesday, citing anonymous sources familiar with the discussions, Ottawa is considering abandoning its current EV mandate that requires 60% of all new car sales to be electric by 2030. Instead, the government is eyeing revised standards that would focus on fuel efficiency targets and credit systems for manufacturers.

Carney is expected to announce the new framework on Thursday, sources told CBC. The shift follows consultations with automotive industry stakeholders about improving Canada's tailpipe emission regulations.

Here's where it gets interesting: while EVs would likely remain central to the new approach, automakers would earn credits for producing electric vehicles and could carry over previously earned credits into the revamped system. That flexibility could be a game-changer for manufacturers trying to navigate the messy transition to electrification.

Rebates Making a Comeback

Remember those EV rebates Canada used to offer? They might be returning. The country's iZEV program, which provided up to CA$5,000 (roughly $3,650) on vehicles priced at CA$50,000 (about $36,500) or less, was scrapped. But sources suggest rebates could make a comeback, along with increased investment in charging infrastructure.

This would be welcome news for General Motors (GM) and Ford Motor Co. (F), both of which sell EVs under the CA$50,000 threshold in Canada. The revised standards might also encourage manufacturers to lean harder into hybrid vehicles, giving them more paths to compliance. All of this comes as Canada's auto sector struggles under the weight of White House-imposed tariffs.

Political Crosscurrents

The timing here matters. President Donald Trump recently rolled back Corporate Average Fuel Economy (CAFE) standards in the United States and has been vocal about criticizing what he called the "ridiculous" fuel economy standards and EV mandates from the Joe Biden administration.

Trump has also taken aim at Canada's recent agreement with China, which allows up to 49,000 Chinese-made EVs to enter Canada at reduced tariff rates. He called it one of the worst deals in history, warning that Canada was "destroying itself" by opening the door to Chinese EVs, and threatened 100% tariffs in response.

So Carney finds himself navigating between climate commitments, domestic auto industry viability, and mounting pressure from Washington. The new policy, whatever form it takes, will need to balance all three.