Light-Duty Vehicles (LDVs) sit at the centre of both the country’s personal mobility and one its largest industrial sectors. Roughly 89% of households own at least one, more than 80% of commuters drive to work, and the fleet has grown 37% since 2008 to 26.8 million vehicles, led by larger SUVs and trucks. Almost all run on gasoline with LDVs producing 11.4% of Canada’s GHG emissions – making them a key decarbonization challenge.
The transition is both industrial and environmental. Canada’s automotive sector is built almost entirely around internal-combustion vehicles and is highly exposed to U.S. trade policy as the global industry reorganizes around electrification and Chinese battery supply chains. Battery-electric vehicles are the primary decarbonization pathway and often beat gasoline on total cost of ownership, yet adoption remains uneven. Zero-emission vehicles reached roughly 18.3% of new sales in 2024 before falling back in 2025 as incentives were paused. Meeting Canada’s targets requires stable policy, a targeted charging build-out, demand-side measures, and a domestic battery and EV value chain.
The system is built around private vehicles.
10-15-year vehicle lifespan mean emissions cuts depend on gradual turnover, not just new sales.
Higher upfront costs persist, especially for high-demand truck and SUVs.
Infrastructure is expanding but patchy in rural/remote areas and multi-unit residential buildings.
Shifting ZEV mandates, incentives, and trade measures create uncertainty for consumers and investors.
CUSMA and tariff risk is existential, and battery supply chains are concentrated in China.
Managing smart charging, time-of-use pricing, and vehicle-to-grid storage as EV loads grow.
Integrating electrification with the rise of automated and connected vehicles.
Scaling recycling, disposal, and second-life battery applications.
Reducing reliance on an internationally dominated battery and critical-minerals supply chain.
Share of zero-emission vehicles in new sales and in the on-road fleet.
Availability and accessibility of charging infrastructure.
EV and battery production capacity and value-chain development.
EVs cut fuel and maintenance costs, with total cost of ownership often below ICE.
Critical-minerals reserves, clean electricity, and existing plants could anchor a domestic battery and EV value chain.
EV batteries can provide grid storage and flexibility.
Scores are grounded in the sources cited throughout each sector assessment, then reviewed by experts and industry stakeholders to confirm how each pathway elements criteria are ranked.
economic viability score
Economic Viability description
