A $20K tax? Here's what we know about Ottawa's zero-emission vehicle mandate

The future of Canada's electric vehicle mandate is uncertain.

Prime Minister Mark Carney announced this month that he is pausing the national mandate, what Ottawa calls the electric vehicle availability standard.

Conservatives have been calling for some time for policy to be scrapped. Carney stopped short of doing that, but did not rule out eliminating the Trudeau-era climate policy.

Canadian and foreign automakers that sell passenger cars, SUVs and pickup trucks in the Canadian market were supposed to achieve incremental zero-emission vehicle sales targets, starting with 20 per cent in 2026 before hitting 100 per cent in 2035.

It's meant to ensure a range of zero-emission vehicles are available to consumers, such as EVs, fuel cell engines (which convert compressed hydrogen into electricity) and plug-in hybrid electric vehicles (PHEVs).

Carney said the government is reviewing various aspects of the mandate over a 60-day period and may make tweaks or eliminate the mandate entirely, like the consumer carbon tax.

The Conservatives aren't the only ones who want the mandate ditched. Automakers have made the case that current market conditions — sagging EV demand and the ongoing trade war — make the targets impossible to meet.

"It will require 20 per cent of dealership sales to be electric and any car sold above that quota will pay a $20,000 tax," Conservative Leader Pierre Poilievre warned of the sales mandate at a news conference last month.

"I call it the Carney tax," Poilievre said.

Here are some answers to better understand the federal EV mandate — and how that $20,000 figure fits in.

No. Drivers will be able to drive gas-powered vehicles as long as they like. The regulations, which the government published online, do not prevent drivers from operating traditional cars, SUVs and pickup trucks. The regulations do not impact the used vehicle market either.

Car manufacturers will still be able to sell gas-powered vehicles even after regulations take full effect in 2035.

But automakers will need to ensure the vehicle is a plug-in hybrid — a car with both a gasoline engine and an electric motor.

The regulations state the PHEV must have an all-electric range of at least 80 kilometres by the time the policy takes full effect.

"Technically, someone could choose to run a PHEV entirely on gas if they wanted to. They'd miss out on a lot of cost savings though," said Joanna Kyriazis, the director of public affairs with the think-tank Clean Energy Canada.

However, the regulations limit how many hybrid vehicles can be used to meeet sales targets.

If automakers fail to meet their annual sales targets, the regulations offer a range of ways to comply.

For example, companies can make up for the shortfall by exceeding targets in the following three years.

Car companies can also earn credits for EVs sold for model years 2024 and 2025.

As the annual targets take effect, companies that end up with surplus credits can sell them to others or bank them.

The regulations also state automakers who deploy charging infrastructure before the end of 2027 will be credited. Each $20,000 spent in eligible charging infrastructure earns automakers a credit.

That might be the origin of Poilievre's claim of a $20,000 tax on car sales.

Brian Kingston, the president and CEO of the Canadian Vehicle Manufacturers' Association, said he assumes that credits would be set at $20,000 because that's the price the government established for charging infrastructure credits.

But neither Kingston nor the federal government are saying how much those credits would really cost.

"This is confidential. Agreements are negotiated between companies," said Kingston, whose association represents the big three North American automakers — Ford, GM and Stellantis.

But as has been seen in other jurisdictions with similar mandates, like Quebec, there could be deals to be made.

"When you have a lot of credits, what happens is the price of credits goes down. We have seen that in California. We have seen that in Quebec where credits were exchanged at about a quarter of the official market rate," said Daniel Breton, the president and CEO of Electric Mobility Canada.