It’s one thing to sabotage your own technological progress. It’s another thing entirely to cross borders and try to kneecap someone else’s climate goals, too.
Canada wants electric vehicles to make up 20% of new car sales by next year, or have automakers purchase regulatory credits if they don’t meet those sales targets. But as the U.S. negotiates a new trade deal with Canada, American automakers—backed by the Trump administration—are reportedly pressuring the country to walk back its EV ambitions.
Welcome to the Friday edition of Critical Materials, your daily round-up of news and events shaping the future of cars and technology.
Also on the deck today: Panasonic’s new battery plant in Kansas won’t function at full capacity anytime soon as its main customer, Tesla, continues to experience declining EV sales. Plus, China’s restrictions on the export of rare earth materials are already impacting the new Nissan Leaf’s production plans.
30%: New Threat Emerges For EV Makers In Canada
Photo by: Tesla
As Canada negotiates a new trade deal with the Trump administration, one key item is reportedly on the table: scrapping the country’s “electric vehicle mandate.” Now that the EV tax credit has an expiration date in the U.S. and stricter emissions pushing for electric growth are also in the crosshairs, it’s an open question as to whether Canada can keep similar goals.
After all, Canada is both a major exporter of vehicles to the U.S., and importer of cars from its neighbor to the south. But for a few exceptions here and there, the two nations’ auto markets are largely in sync.
Now, many groups want Canada to change course too, as the Wall Street Journal reports:
Canadian regulations dictate that all new vehicles sold in 2035 be powered by electricity, with an initial goal of 20% of sales by the end of 2026. Canadian auto-lobby groups have pushed back, calling for that mandate to be scrapped amid poor EV sales and the White House-fueled disruption to the auto manufacturing business.
The Liberal government, led by Prime Minister Mark Carney, “can do both: be very pragmatic to make sure we can help the sector and at the same time help with the adoption of new vehicles,” Joly said.
“We are having many conversations and more to say in the coming weeks,” the minister added. She didn’t elaborate on the focus of those talks.
The Canadian Vehicle Manufacturers Association has said the 2035 mandate needs to be scrapped given present conditions. Brian Kingston, the association’s chief executive, said this week in the Financial Post that the 2035 EV sales mandate “prioritizes unrealistic EV sales targets that benefit companies with no Canadian footprint over the development of our domestic EV industry.”
Here’s more from Politico this morning:
“The auto sector is saying, ‘If we’re going to stay in Canada, you must get rid of this EV mandate,’” a Canadian government official with direct knowledge of Canada’s negotiating strategy told Politico.
At the bargaining table with Trump, there is concern that Canada’s auto sector is out of sync with the U.S., said the official with knowledge of the negotiations.
“We do not have a trade problem. We have a policy alignment problem from the perspective of the Trump administration,” said the official.
After recently scrapping a controversial Digital Services Tax that would have hit U.S. tech giants such as Google, Amazon and Netflix, Carney’s government is now under pressure from automakers and Trump himself to ditch Canada’s EV mandate.
Unlike the U.S., Canada actually seems to be taking climate change more seriously. Even if it misses next year’s 20% EV sales target, its framework is designed to keep pushing electrification forward. But that progress is at risk.
Sure, the likes of General Motors and Ford have reason to oppose buying regulatory credits from Tesla—it eats into their margins and affects their bottom line. But without mandates and penalties, there’s little incentive for legacy automakers to prioritize EVs at all.
History has proven time and again that government-led efforts do indeed result in cleaner air and better transportation. Instead, the U.S. is trying to export its anti-EV politics onto other nations.
60%: Panasonic Delays U.S. Battery Production Targets
Panasonic cylindrical lithium-ion battery cells: from left the 1865-, 2170- and 4680-type
Japanese electronics and battery giant Panasonic will inaugurate its $4 billion lithium-ion battery manufacturing plant in De Soto, Kansas, next week. Tesla is Panasonic’s biggest customer, but as its sales are declining, the battery maker has now reportedly reduced its U.S. production targets.
Here’s more from Nikkei:
While the Japanese electronics giant was initially aiming for full production of an annual 30 gigawatt-hours by the end of March 2027, it will postpone the target date.
Panasonic has already rolled back its ambitions for U.S. expansion. It has one battery plant in Nevada, which is part of the Tesla Gigafactory campus. It wanted to build a third plant in the U.S., but froze those plans last year as Tesla sales continued to decline and federal support for EVs has largely stalled.
Tesla also reportedly pressured Panasonic to increase its U.S. output as tariffs now threaten to increase battery and raw material prices. U.S.-made cells could shield the automaker from higher prices and help it stay relevant as competition in the space continues to intensify.
90%: Nissan Leaf Production Affected By China’s Trade Restrictions
Photo by: Nissan
China utterly dominates the supply chain of rare earth materials that are used in everything from consumer electronics to defense weapons and EVs. Now, a U.S.-triggered trade war means the country is leveraging its advantage by restricting the exports of these materials, which could affect the rollout of the Nissan Leaf.
Its initial production is now expected to be slow due to these restrictions, Reuters reported this week.
The new Leaf is Nissan’s make-it-or-break-it car. We have seen it up close and also took a prototype for a spin in Japan earlier this year. It’s promising, even if not truly groundbreaking. But a slow production of the Leaf, which will be made in Japan and the U.K., could hamper Nissan’s comeback plans.
The company has already delayed the production of two other electrified crossovers due to unclear demand for EVs in the U.S. and the recent death-blow to the federal clean vehicle credits.
100%: Is The U.S. Overstepping By Influencing Canada’s EV Plans?
Photo by: InsideEVs
I’m no foreign policy expert. But at a time when foreign governments need to co-operate and accelerate efforts to reverse climate change, the opposite seems to be happening, especially in North America. It’s pretty clear that the U.S. is forcing Canada to roll back its EV plans.
Just like the current administration did it here, by misconstruing the terms “EV mandate” and using it to fearmonger that the government is trying to force EVs on consumers, it seems like the U.S. is also exporting its agenda across its borders.
Is this just hardball trade negotiation? Or is it a case of American overreach, interfering with another country’s right to pursue its own climate policy? Is the U.S. crossing a line by trying to slow Canada’s climate ambitions? Leave your thoughts in the comments.
Have a tip? Contact the author: suvrat.kothari@insideevs.com
