Canada’s EV Mandate: Economic Disruption and Massive Layoffs?

Implementing a mandate on a schedule that outpaces achievement of cost parity risks the destruction of the auto sector in its entirety as well as substantial losses to the rest of the economy.

As Canada pushes toward an ambitious 100% zero-emission vehicle (ZEV) sales mandate by 2035, a vital question is emerging: Are we truly prepared for the labour market shock this transition may bring?

While environmental goals are important, they must be grounded in economic reality, especially for the hundreds of thousands of Canadians whose livelihoods depend on traditional internal combustion engine (ICE) industries. We examine the implications of this mandate for workers, employers, and the associated legal obligations.

Significant Job Losses Forecasted

According to the University of Guelph’s economic modelling, if Canada continues with its ZEV mandate, assuming cost parity by 2035, the country could experience a peak loss of over 120,000 jobs nationally during the transition years. While some jobs may be recovered by 2040, the model indicates a prolonged period of net negative employment between 2025 and 2035, a critical time for families and communities already facing affordability struggles.

Breakdown by Region: Who’s Hit Hardest?

Ontario is ground zero. As the epicentre of Canada’s auto manufacturing industry, the province stands to absorb the greatest shock from the EV transition. Communities like Windsor, Oshawa, Oakville, and Alliston are home to major assembly plants, parts manufacturers, and logistics hubs, many of which are deeply tied to internal combustion engine (ICE) vehicles. For decades, these towns have built their economic foundations around the automotive sector, supporting not just direct manufacturing jobs but also a vast web of secondary employment, including transportation, warehousing, tool and die shops, real estate, retail, healthcare, and municipal services.

The economic ripple effect of widespread ICE job loss could be devastating. As plant closures or retooling reduce income in these communities, housing markets may weaken, small businesses could see a drop in spending, and local tax bases may shrink, straining everything from public transit to social programs.

Regional job disruption isn’t just an employment issue; it’s a full-spectrum economic and social challenge. Without targeted support and strategic transition planning, these communities risk being left behind in the EV race.

Disruption Along the Supply Chain

Electric vehicle (EV) manufacturing doesn’t simply tweak existing processes; it replaces entire segments of the traditional automotive supply chain. Gone are the engines, transmissions, fuel systems, and exhaust assemblies that power internal combustion vehicles. In their place: lithium-ion batteries, power control units, advanced driver-assistance systems (ADAS), and complex software integration. This shift leaves many current parts suppliers facing a harsh reality: unless they can rapidly retool and adapt, their core business may become obsolete.

For employers, the challenge is twofold: identifying which roles and departments will remain viable, and investing in the right technologies and talent to stay competitive. That’s no small feat amid global supply chain strain, rising costs, tariffs and rapidly evolving consumer demand. Strategic planning, labour forecasting, and capital allocation have never been more crucial.

For employees, this transformation creates deep uncertainty. Workers who have spent decades mastering ICE-specific tasks, such as machining engine blocks or assembling gearboxes, may find their skills undervalued or irrelevant in the EV era. Without access to retraining or meaningful transition support, many risk falling through the cracks, facing displacement not due to poor performance, but due to a systemic industry overhaul.

The Timeline Problem: Policy vs. Market Readiness

The Guelph report rightly questions the assumption that EV cost parity with ICE vehicles will be achieved by 2035. Factors like battery cost volatility, limited charging infrastructure, and tepid consumer demand cast doubt on the feasibility of a smooth transition. Government policy is moving faster than market realities, forcing businesses and workers to make strategic decisions with unclear outcomes.

Retooling and Reskilling: Who Bears the Burden?

Employers may have a duty to consider alternative roles or training for displaced workers, but funding, program availability, and feasibility remain open questions. In practice, this could mean:

Costly out-of-pocket retraining

Workforce shrinkage due to a lack of reskilling support

Mental health impacts and morale issues among surviving employees

It’s easy to discuss economic transitions in abstract terms, but for thousands of workers across Canada, this is a deeply personal issue. Skilled tradespeople, parts specialists, plant operators, many with families, mortgages, and 20+ years of tenure, could find themselves forced out of the only career they’ve ever known.

Without engagement from labour organizations, worker advocates, and employment law experts, this transition risks becoming another tale of policy made without the people it affects at the table.

Legal Ramifications of Mass Layoffs: What Employers Must Know

As companies retool or downsize, many will face obligations under provincial and federal employment laws:

Employment Standards Act (ESA): Requires notice or payment in lieu of notice for terminated employees.

ESA Mass Termination Rules: In Ontario, employers terminating 50 or more workers at once are required to inform the Ministry of Labour and provide notice as follows:

- 50 to 199 employees – 8 weeks’ notice or payment in lieu;

- 200 to 499 employees – 12 weeks’ notice or payment in lieu; and

- 500 or more employees – 16 weeks’ notice or payment in lieu.

Common Law Claims: Workers may sue for wrongful dismissal if severance doesn’t reflect their length of service, age, or job availability.

The auto industry is particularly vulnerable. Many workers have specialized ICE-related skills, are mid-to late-career professionals, and may not qualify for new roles without incurring costly retraining. Without a national transition strategy, employers risk exposure to costly litigation and reputational harm.

The Need for Realistic Transition Planning

While greener goals matter, so do the livelihoods of the people powering our economy. Rushing policy timelines without regard for market and economic conditions, legal obligations, and employment realities will harm the very communities these initiatives aim to support. A transition of this magnitude requires thoughtful, realistic, and legally sound planning, with input from all stakeholders.

Need legal guidance on workforce transitions or strategy?

Minken Employment Lawyers (Est. 1990) brings over 35 years of experience helping employers and employees navigate complex workplace changes, such as helping with mass terminations. If you’re assessing your situation and need help in strategizing and implementation of your next steps, contact us today at 905-477-7011 or contact@minken.com for guidance on how to minimize legal risk and expense.

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Please note that this article is for informational purposes only and does not constitute legal advice or opinion.