Three Canadian lawyers at Dentons — one of the world's largest law firms, — are warning that the coming months will be pivotal for anyone with a stake in the Canadian automotive sector
Ali Amadee, Sean Stephenson and Anoosh Loertscher have published a detailed analysis of Canada's revised automotive strategy, warning that "the coming months may prove pivotal in assessing compliance obligations, investment decisions and engagement with policymakers as Canada advances its next phase of automotive electrification."
It was prompted by Ottawa's February 5 announcement of a sweeping new national automotive strategy. The lawyers conclude that "Canada's revised automotive strategy reflects a deliberate effort to balance climate objectives with industrial competitiveness in an increasingly uncertain global market."
Their most significant finding is that the government's decision to scrap mandatory EV sales targets is not a retreat from electrification — it is a structural shift in how electrification will be enforced.
"As part of this shift, the federal government has confirmed it will formally repeal the Electric Vehicle Availability Standard (EVAS), replacing prescriptive sales mandates with an emissions‑based regulatory framework."
Automakers will no longer be required to sell a fixed percentage of EVs. They will instead be held to emissions outcomes, with flexibility in how they get there.
The bulletin identifies the new purchase incentive program as the demand-side counterweight to that regulatory loosening. Ottawa is spending $2.3 billion over five years on rebates of up to $5,000 for battery electric vehicles and $2,500 for plug-in hybrids, starting February 16. The rebates decline every year through 2030 and are designed as a time-limited stimulus, not a permanent feature of the market.
On eligibility, the bulletin flags rules with sharp trade policy teeth. Chinese-made EVs are excluded from rebates entirely, despite a recent bilateral agreement allowing 49,000 of them into Canada at a reduced tariff. Vehicles from free-trade partner countries face a $50,000 price cap to qualify. The lawyers draw particular attention to one exception: "Vehicles fully manufactured in Canada are exempt from this price cap, providing a competitive advantage to domestic production regardless of vehicle price."
The bulletin also highlights a proposed policy that has received little public attention — a tradeable import credit system under which manufacturers could earn credits through Canadian production and use them to facilitate imports. The lawyers warn this would have serious compliance implications: "If implemented, such a system would directly link import flexibility to domestic investment, production activity and job creation, introducing new compliance and strategic planning considerations for original equipment manufacturers (OEMs) operating in Canada."
Rounding out the bulletin's findings are $1.5 billion for public charging and hydrogen infrastructure, up to $3 billion from a Strategic Response Fund, up to $100 million from a Regional Tariff Response Initiative, and a new federal automotive task force co-ordinating government and industry on electrification, investment and the upcoming renegotiation of CUSMA — the Canada-United States-Mexico Agreement.
