The status quo isn’t working, and Canada’s automotive industry might need a reset—here’s how to do it

So, we need a big idea. A really big idea. One made possible only by the severity of the crisis we’re in. In that spirit, over the next few weeks, we’ll be positing a few such changes in strategy. Here’s the first, and pardon if it’s a recycle of something I recommended to Pierre back when it looked like he might actually someday form a government.

As I told the Conservative leader then, we should have never cancelled the EV mandate. Instead, we should have just renamed it an ‘electrification’ mandate. Instead of just promoting pure battery-electrics (BEVs) and plug-in hybrids (PHEVs), we’d include also regular hybrids (HEVs). As I mentioned back then, such a compromise would offer numerous benefits. It might mollify the environmentalists in your caucus — at least more than your recent CO2 regulation has — while aligning federal policy with Quebec’s (which has now included hybrids in its ZEV mandate) and, just as importantly, not totally pissed off the pro-ICE crowd (even Albertans love them HEVs).

As to why now and how the heck it helps save the Canadian auto industry, well, I’m hoping someone in your government has noticed that all the Toyota RAV4s made in Woodstock, Ontario are now hybrids. Oh, Toyota Motor Manufacturing Canada (TMMC) still produces a few gas-fuelled NX and RX Lexi, but well over 450,000 of the cars it produces in Canada are hybrid-powered. Within a year, it’s probable that Toyota’s entire Canadian production will be HEVs.

Honda Canada, meanwhile, assembles about 200,000 CR-Vs in its Alliston plant, about half of which are hybrids. Now, I have no idea what Honda of Canada Manufacturing’s plans might be, but I do know that the CR-V is due to go all hybrid in short order. Some Canadian-built Civics are also hybrids, which means that, come the end of next year, all of the Toyotas built in Canada and most of Honda’s Canadian production will be hybrids.

If you add up all the plants in Ontario, some 1,216,793 million vehicles were built in Canada last year. Three-quarters of them — 77%, actually — were built by Toyota or Honda. And, if my projection of hybrid penetration is correct, by the end of next year, almost 90% of those two companies’ combined output will be hybrids. In other words, more than half of all the cars built in Canada will be hybrids manufactured by either Honda or Toyota. If you’re really trying to find the best way to protect the Canadian auto manufacturing industry, a good place to start would be to try find a way to promote the cars they build.

Of course, the EV influencer crowd will be up in arms. But the truth is that uptake of purely battery-powered cars in North America is in the toilet. In the United States, after Trump eliminated America’s federal USD$7,500 subsidies, hybrids now outsell ZEVs almost three-to-one. In Canada, which still has a federal subsidy program — plus provincial ones in British Columbia and Quebec — hybrids, which see no incentivization, outsell BEVs by more than two-to-one. The simple truth is that hybrid sales are growing because consumers want them; EV sales only increase when the government pays for (part of) them.

One place to start would be with ride-hail drivers. You know, Uber and the like. There are more than 200,000 of them working in Canada, and few are the gig workers who deserve a leg up more than wannabe taxi drivers. Between the advantage of reduced fuel costs and a subsidy for Canadian-built partially-electrified vehicles, hybrids could own that market in no time, especially since hybrids are at their most fuel-efficient — and I’ll remind all those skeptical enviro types — when driven emissions-free.

Do the same with regular taxi, limo, and Amazon delivery drivers, “encourage” federal departments to buy hybrids, and you just might see enough of an uptake to keep at least part of Honda’s and Toyota’s production in Canada. And, if we really are serious about keeping promised military industry expenditures here in Canada, maybe some of those could be hybrid-driven, too.

With a little luck, we could build Canada into the hybrid “hub” we once envisaged for battery-electric vehicles. While Motor Mouth long ago predicted the EV experiment would end in failure, all the same arguments made back then — an immense parts manufacturing industry, excellent research facilities, and, of course, our vast natural resources — still hold true here.

The simple truth is that hybrid sales are growing because consumers want them; EV sales only increase when the government pays for them

The difference is that they make more sense when applied to hybrids. There was never going to be enough EV sales to justify the huge investment the Trudeau Liberals dumped into battery plants. But hybrid sales are surging, and the two automakers most likely to survive Trump’s desire to turn us into a manufacturing wasteland already produce hundreds of thousands of them right here in the Great White Frozen North.

Could Canada become a hybrid manufacturing hub? It’s probably a long shot. But again, not nearly as much of one as our misguided attempt at becoming a global supplier of EVs. China, with both a monopoly on critical-materials processing and low-cost labour, has a virtually unassailable lead in that department. But nobody has such a monopoly on all aspects of hybrid manufacturing.

Japan has the whole technology thing pretty much sewn up, but none the natural resources to make them completely independent. Australia has a whole Continental crust full of minerals, but no auto industry to speak of. Canada has pretty much every critical mineral needed to build an electrified car, and a lot of experience assembling them. If we were smart enough to process those metals here instead of just shipping them south of the border — as Trump is pressuring us to do — maybe, just maybe, we’d also get a chance to build the electric motors and small batteries that those hybrids need.

It’s also worth noting that hybrids, once thought of as nothing more than a stepping stone to battery-electrics, are now looking more like a destination technology. With all the noise being made about the growth of EV sales, in many markets, hybrids outsell EVs. The European Union, for instance, is touted as a hotbed of EV popularity. Less widely reported, however, is that in Germany, Italy, and France — the three largest auto markets in the E.U. — hybrids outsell BEVs by quite some margin. In Italy, in fact, hybrids own a 52% market share, more than ICEs (20.3%), diesels (6.7%), PHEVs (8%), and BEVs (8%) combined.

Now some of those are mild-hybrids, but if you add the PHEV segment to HEVs (where they belong, instead of being lumped in with BEVs) hybrids outsell pure battery-powered vehicles by two to one. Hell, even in the hotbed of battery power, China, fully one-third of all the cars classified as New Energy Vehicles — that 60% of sales that EV influencers are constantly referencing — are hybrids of one kind or another (either PHEVs or EREVs). The point is hybrid sales are hot. In some cases, hotter than EVs. Why we chose BEVs to subsidize when local consumers were always destined to prefer hybrids is beyond me.

But perhaps today, staring down the twin barrels of Trump tariffs and Chinese EVs, there might be an opportunity to thread some new middle path. Political leaders are always chastened to never let a good crisis go to waste. If the best you can do to save our auto industry, Mr. Carney, is to lop a couple of points off an already egregious tariff rate, then maybe this whole Bank of England shtick you’ve been riding is just smoke and mirrors.

Author’s note: I know how easy it will be to pick holes in the preceding argument. Indeed, I can think of more than a few criticisms of my own. More important than any discussion of whether such a specific focus on hybrids could work, however, is that we begin to think of the wholesale changes that will make Canada’s auto industry foolproof. Discounting tariff percentages may yet prove to be an effective finger in the dike, but it doesn’t mean we still don’t have to rebuild the canal.

I’d also remind those commenters contemptuous of the auto industry as a whole that Toyota and Honda, unlike the Detroit Three, have never laid off a single full-time Canadian worker, and that both have increased the number of cars produced here in Canada fairly steadily since they first landed on our shores. Let’s not throw the baby out with the bathwater.

Sign up for our newsletter Blind-Spot Monitor and follow our social channels on X, Tiktok and LinkedIn to stay up to date on the latest automotive news, reviews, car culture, and vehicle shopping advice.