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Carney Warns Canada Falling Behind in EV Transition

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  Published in Automotive and Transportation on Sunday, February 8th 2026 at 9:22 GMT by The Globe and Mail
      Locales: Ontario, Alberta, Quebec, CANADA

Toronto, ON - February 8th, 2026 - Former Bank of Canada governor Mark Carney delivered a stark warning this week, asserting that Canada's current strategy for transitioning to electric vehicles (EVs) is inadequate and risks leaving the nation trailing behind global leaders. Speaking at a panel discussion hosted by the Canadian Association of Automotive Treatment Facilities (CAAT), Carney emphasized the urgency for a more proactive and ambitious approach to secure the future of Canada's auto sector.

Carney's assessment comes at a critical juncture. The Liberal government has committed to a target of 100% zero-emission vehicle sales by 2035 - a goal widely seen as laudable, but increasingly challenging to achieve given the rapid advancements and aggressive policies being implemented elsewhere, particularly in the United States. While Ottawa has introduced consumer incentives for EV purchases and pledged investment in charging infrastructure, Carney argues these measures represent a foundational step, not a comprehensive strategy.

"What we're doing isn't working," Carney stated bluntly. "Canada is falling behind." He drew a direct comparison to the impact of the U.S. Inflation Reduction Act (IRA), which has unleashed a wave of investment in EV manufacturing and, crucially, battery production within the United States. The IRA's significant tax credits and subsidies have effectively lured companies to establish a complete EV supply chain on American soil, from raw material processing to final vehicle assembly.

"The U.S. is creating an entire EV supply chain," Carney explained. "We need to be more intentional in Canada."

Canada possesses significant advantages that should, theoretically, position it as a prime location for EV investment. The nation is rich in critical minerals essential for battery production, including lithium, nickel, cobalt, and graphite. Furthermore, Canada boasts a highly skilled workforce with a long and established history in automotive manufacturing. However, Carney contends that these inherent strengths are being underutilized due to a lack of decisive government action.

He advocates for a more robust package of incentives for manufacturers considering establishing EV production facilities in Canada. These incentives, he suggests, should be more generous than those currently offered and should address the full spectrum of investment costs - including factory construction, equipment acquisition, and workforce training. Streamlining the regulatory process is also vital, reducing bureaucratic hurdles and ensuring a predictable and efficient environment for companies to invest and operate.

"We're not going to create jobs if we don't attract investment," Carney warned. "And we're not going to attract investment if we don't have a competitive environment."

The need for a collaborative ecosystem was also a recurring theme in Carney's address. He stressed that a successful EV transition cannot be achieved by government alone. A strong partnership between government, industry players (including automakers, parts suppliers, and technology companies), and labour unions is essential to fostering innovation, developing skilled trades, and ensuring a just transition for workers currently employed in internal combustion engine vehicle manufacturing.

Neil Demaine, President and CEO of CAAT, echoed Carney's concerns. "This is a pivotal moment for the Canadian auto sector," he said. "We need to ensure that we're well-positioned to capitalize on the opportunities that the EV transition presents." Demaine noted that the automotive industry is undergoing a fundamental restructuring, driven by technological advancements and shifting consumer preferences. Adaptability and proactive policy are key to navigating these changes successfully.

The implications of failing to address these challenges are significant. Without a robust EV sector, Canada risks losing thousands of jobs, ceding its position as a major automotive manufacturing hub, and becoming increasingly reliant on imported EVs and battery components. Furthermore, the environmental benefits of transitioning to EVs will be diminished if production takes place in countries with less stringent environmental regulations.

Experts suggest that the focus must also shift towards domestic battery production. Currently, Canada relies heavily on imported batteries, creating a vulnerability in the supply chain. Investing in domestic battery manufacturing capacity would not only create jobs but also enhance energy security and reduce transportation costs. Beyond incentives, investments in research and development are crucial for establishing Canada as a leader in next-generation battery technologies.

The clock is ticking, and the pressure is mounting on the Canadian government to respond decisively. While the 2035 zero-emission vehicle target remains in place, achieving it will require a paradigm shift in approach - a shift that Carney argues is urgently needed to ensure Canada's automotive future.