Traditional automakers surge as Canada scraps EV sales mandate
Policy shift replaces 100% electrification target with fuel efficiency credits, easing regulatory pressure on loss-making EV divisions
Traditional automakers rallied in early trading on Wednesday after Canada announced it would eliminate its electric vehicle sales mandate, removing a key regulatory hurdle that had pressured the industry toward an ambitious—and costly—electrification timeline.
The policy shift scraps requirements that 20% of new vehicle sales be zero-emission by 2026, rising to 100% by 2035. Instead, the Canadian government will implement a fuel efficiency credit system that provides automakers greater flexibility in meeting environmental standards. The decision comes after Prime Minister Mark Carney paused the 2026 targets in September, citing "extreme pressure" on the Canadian auto sector amid U.S. trade tensions.
For Ford Motor Company, General Motors, and Stellantis, the announcement represents significant regulatory relief for electric vehicle divisions that have collectively incurred more than $83.6 billion in losses between 2022 and the third quarter of 2025. The three automakers have struggled with slowing EV demand, manufacturing challenges, and the need to invest heavily in new technology while consumer adoption lagged behind expectations.
Ford, which reported a $19.5 billion write-down on its EV business in 2025, saw its electric vehicle sales decline 14.1% last year. The company's total losses from EV ventures have reached an estimated $35.1 billion. General Motors absorbed approximately $7.6 billion in EV production-related losses in 2025, contributing to a fourth-quarter net loss of $3.31 billion. Stellantis reported a net loss of nearly €2.3 billion ($2.5 billion) for the first half of 2025, though its losses were more broadly distributed across market segments.
The Canadian policy change signals a broader retreat from aggressive EV mandates across North America. Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers' Association, had argued that achieving 100% electric new car sales within a decade was impossible with current government support, according to CBC reporting. The association has pushed to eliminate the mandate, arguing it duplicates existing tailpipe emissions regulations.
Ford shares, which have struggled to gain traction despite the company's recent stock split announcement, rose 0.7% to $13.82. General Motors gained 0.7% to $86.29, while Stellantis advanced 3.1% to $10.23—its strongest performance among the trio. All three stocks have faced pressure over the past year as investors questioned the pace and profitability of their electrification strategies.
Analysts have grown increasingly concerned about automakers' ability to generate returns from EV investments as consumer demand softens and price competition intensifies. The transition to fuel efficiency credits in Canada mirrors a broader regulatory recalibration, giving automakers more latitude to match production to actual market demand rather than government-prescribed targets.
However, the policy shift does not represent an abandonment of environmental goals. The Canadian government is still exploring ways to expand EV charging infrastructure and may reinstate consumer incentives for electric vehicle purchases, according to the CBC report. The previous incentive program, which offered up to C$5,000 per vehicle, was suspended more than a year ago after its funding was depleted.
The regulatory breathing room comes at a critical juncture for traditional automakers, which are now balancing shareholder pressure for profitability with the long-term transition to electric vehicles. With EV timelines extending and regulatory pressure easing, the focus shifts to demonstrating that their electrification investments can eventually generate sustainable returns.