The federal government should suspend its electric vehicle mandate until it resolves its trade tensions around autos both with the United States and its tariffs on Chinese-made EVs, says a new C.D. Howe Institute policy paper. “That may take a day, a month, a year or I don’t know how long,” Brian Livingston, a senior fellow at C.D. Howe, author of the paper and an engineer and lawyer by training, said. “But you can’t have this mandate in place when you have a whole lot of other stuff going on.” The EV mandate, officially known as the electric vehicle availability standard , imposed minimum EV sales requirements on automakers, including 20 per cent by 2026, 30 per cent by 2030 and 100 per cent by 2035. It defined a zero-emission vehicle (ZEV) as either a battery electric vehicle or a plug-in hybrid. Through the first half of 2025, EV sales in Canada were around nine per cent of total vehicle sales, far below the 20 per cent threshold expected next year. In September, the federal government announced a one-year pause and a 60-day review of its policy. Livingston, in his paper for C.D. Howe, said continuing with the EV mandate is likely to have a number of negative side effects for the country’s auto sector, including a cost of more than $200 million in 2026 alone, a transfer of payments from automakers in Canada to automakers outside the country, or possibly a reduction in the number of internal combustion engine and hybrid vehicles available for sale here. “It’s just not going to work,” he said about the EV mandate. ”It’s a you-plug-it-in-and-it’s-not-working kind of thing; the policy is not achieving the goal it was intended to achieve, which is to increase sales of EVs.” Livingston’s paper assumes 1.9 million vehicles will be sold in Canada in 2026, which is the rough projection for 2025. Under the EV mandate, automakers would need to sell at least 380,000 ZEVs. Even if EV sales increased to around 14 per cent of the total vehicles sold, or 270,000 vehicles, in 2026, automakers would still face a 110,000 shortfall to meet the 20 per cent EV sales minimum. The mandate allows automakers to offset up to 10 per cent of their minimum sales threshold by building charging stations, at an estimated investment of $20,000 per station. They also offset some of that minimum sales through “early compliance credits,” which automakers earn for EV sales that have already occurred. By Livingston’s calculation, that would still amount to a cost of around $200 million. Automakers that fail to meet the threshold could also buy credits from automakers that have more than 20 per cent of their sales in ZEVs. The cost of a credit would depend on what the automakers negotiate with each other, which is unknown, Livingston said in his paper. Still, he projects that none of the five companies with manufacturing operations in Canada — Ford Motor Co., Honda Motor Co. Ltd., General Motors Co., Stellantis NV and Toyota Motor Corp. — would be able to meet the 20 per cent EV sales minimum by 2026. Companies that are likely to have excess credits include a number of automakers with operations outside Canada. Livingston suggests this likely includes EV automakers such as Tesla Inc. and Rivian Automotive Inc., as well as Hyundai Auto Canada, Kia Canada Inc., Mitsubishi Motor Sales of Canada, Volvo Cars Canada and BMW Group Canada. Automakers could also simply meet the EV sales minimum target by selling fewer internal combustion engine and hybrid vehicles. “Politically, that’s where I think it might be explosive,” Livingston said. If the government keeps the mandate in place, he suggests it should collect payments from automakers that can’t meet the minimum sales target rather than foreign automakers that exceed the EV sales threshold. He also suggests more realistic EV sales targets that are in line with market realities and that the government could expand its definition of ZEVs to include hybrids. But Livingston said the Canadian auto sector is in “turmoil.” The U.S. and Canada have both erected complex tariff regimes on each other’s finished vehicles and auto parts, which is adding costs for automakers and creating policy uncertainty. Already this year, GM has announced it will cut a shift at one of its plants in Ontario next year while adding a shift in the U.S. It also closed a plant in Ontario that made electric delivery vans due to a lack of demand. Stellantis has halted work on a planned retooling of its plant in Brampton, Ont., leaving the future of that operation in jeopardy. In late 2024, meanwhile, the federal government imposed 100 per cent tariffs on EVs made in China, which is the world’s largest source of EV exports. Against this backdrop, Livingston also called for an indefinite suspension of the EV mandate so that the government doesn’t inadvertently damage the sector during a rough period. Used EV prices hit 2025 high as new electric vehicle sales dropCanada's electric vehicle supply chain is fading. Will dreams of making the country an EV powerhouse survive? • Email: gfriedman@postmedia.com