Tesla set to profit as Canadian automakers struggle with EV mandates

Canada’s revised electric vehicle sales mandate is forcing traditional automakers into a difficult position, with many expected to buy costly compliance credits from Tesla to avoid steep fines.

Canada’s EV policy requires carmakers to meet strict electric vehicle sales targets or pay penalties of up to $20,000 per vehicle. Prime Minister Mark Carney paused Canada’s EV mandates for 2026, but the policy still remains intact for 2030 and beyond.

Tesla positioned as primary credit seller

Industry leaders warn that Tesla, which only sells electric cars and therefore holds a surplus of credits, could earn billions by selling them to competitors.

Brian Kingston, head of the Canadian Vehicle Manufacturers’ Association (CVMA), said the current shortfall between automakers’ projected EV sales and mandated targets could translate to more than $3 billion in credit purchases. Tesla has already logged over US$1 billion in regulatory credit revenue in the first half of 2025, though the company does not disclose the buyers or regions involved.

Government review sparks industry pushback

Carney’s government paused the 20% EV sales requirement for 2026, but long-term goals of 60% by 2030 and 100% by 2035 remain. The pause comes as Canada faces mounting economic pressures, including 66,000 lost jobs in August and rising unemployment.

Automakers argue that the program unfairly penalizes companies with significant Canadian operations while benefiting Tesla, which has little local presence. The CVMA is now calling for a full repeal of the credit system, citing the need to protect investment, local jobs, and competitiveness in Canada’s auto sector.

“Now the federal government has regulations that specifically punishes companies that have a footprint here, requiring them to purchase credits from a company that has a minimal (Canadian) footprint and an almost nonexistent employee base. Why on earth would you do that, particularly in an environment where companies are already facing enormous economic pressure from tariffs?” Kingston told the Toronto Sun.

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