Speaking at an auto parts manufacturer in Woodbridge, Ont., Prime Minister Mark Carney said Ottawa is restoring the rebate program with $2.3 billion to help Canadians cover the cost of a new EV, and has set aside $1.5 billion for EV infrastructure like charging stations.

Government officials at a technical briefing Thursday were unable to say exactly what impact these new measures will have on Canada's overall emissions. They promised to publish modelling in the coming months and the government said it is committed to cutting vehicle emissions in half by 2035.

Taking questions from reporters, Carney said that tracks to 74 grams per mile, down from the current federal tailpipe emissions standard of 172 grams per mile -- a 56.9 per cent reduction.

Auto companies will be allowed some flexibility on meeting the new standards, including on improving fuel efficiency in gas-powered models, but the government said all companies will be required to increase EV sales over time in order to meet the standard.

The government said it expects the new standards will drive the adoption rate of EVs to 75 per cent of new vehicles by 2035, and 90 per cent by 2040.

The sales mandate Carney is eliminating would have required that 100 per cent of new passenger vehicle sales be electric by 2035.

The government says it's still working on the path to get to the 74 grams per mile figure. One official said the work will happen through the regulatory process, with initial regulations targeting the 2027 to 2032 model years.

"We are very clearly incentivizing investment in low-zero-emission vehicle supply chain," Carney said.

"We know where the auto industry is headed. We're going to support that transition, but we're reducing emissions while we get there."

The new electric vehicle rebate program will launch on Feb. 16 and Ottawa will offer $5,000 toward the cost of a new EV and $2,500 toward plug-in hybrids. Those rebates will decrease every year until they're phased out after 2030 -- or until the money for the program runs out.

The government says it's hoping the program will help put 840,000 new EVs on the road.

The rebates will only apply to vehicles which cost less than $50,000 and are imported from a country with a free-trade agreement with Canada -- meaning the Chinese EVs Ottawa is allowing into the country won't be eligible for the rebates.

A list provided by the government indicates roughly 23 models are eligible for the rebate. That number is expected to grow as dealerships reduce the sticker price on vehicles to make them eligible for the rebates, as was the case under the previous program.

Canadian-made EVs, which right now include only the Dodge Charger and the Chrysler Pacifica, are exempt from the $50,000 cap.

While Thursday's announcement was hailed by Canada's auto dealers as a "good step in the right direction," a spokesperson for the organization representing them said the "arbitrary" cap is counterproductive.

"We think the artificial cap of $50,000 is too low. If the policy objective is to get more EVs on the road, we don't quite see why there has to be a price cap," Huw Williams of the Canadian Automobile Dealers Association told The Canadian Press.

"It's an enormously positive first step to get rid of the EV mandate. For us, that's been our central message, and the need for the return of incentives."

Thursday's announcement also includes a plan to launch public consultations to rework Canada's remissions on the auto sector.

Right now, vehicle manufactures are allowed to import a certain number of vehicles tariff-free as long as they maintain production levels in Canada.

The government signalled Thursday its intent to expand on that by introducing a credit system to encourage automakers to build more in Canada.

"Companies that manufacture and invest here would earn credits, while companies seeking to sell vehicles in Canada without paying tariffs would be required to purchase credits," Carney said in announcing the plan.

This report by The Canadian Press was first published on Feb. 5, 2026.

-- With files from Maan Alhmidi in Woodbridge, Ont.