A Canadian Strategy for Driving Automation

Canada must chart its own course

Last weekend, North America disintegrated.

Canada is still here, of course. So is Mexico, and the USA. But economically, they are no longer integrated.

As everyone knows by now, President Trump has threatened to levy 25% tariffs on Canadian and Mexican goods, which were to have taken effect on 4 February. He gave multiple and contradictory rationales for this move. One was that Canada was not doing enough to secure the US border to prevent the infiltration of drugs and illegal immigrants; strange, given that typically it is the receiving party that has the responsibility of securing its border against unwanted arrivals. Another was that Canada doesn’t permit US banks to do business in the country, which was untrue. Yet another was that Canada is an illegitimate state and the tariffs explicitly aimed to hasten Canada’s surrender and accession to the USA.

The final, and to my mind likeliest, reason was to encourage future investors to do business within the USA, rather than to do it Canada with expectation of export. It’s a poor rationale. It not only depends on mercantilist economics, but also overlooks how much of Canada’s exports to the USA consist of natural resources, which cannot be gathered elsewhere, only exported. Alberta’s oil, Saskatchewan’s potash, Quebec’s aluminum, and British Columbia’s timber must be produced in Canada, and tariffs won’t change that. (Annexation would change that, but that is not only impossible, but also a bad idea on its merits.)

The tariffs are on hiatus, on the spurious grounds that Canada will do more to secure the border; I say spurious because almost everything Canada agreed to do, it already committed to in December. But the tariffs may return in March. It is important for Americans to understand that this brief episode will not be a blip in the country’s news cycle. The tariffs promised Canada economic ruin, and galvanized the entire country; not just its governments, but its people too. The whole country is now united… against the United States, manifesting in everything from booing the Star-Spangled Banner at hockey games, to spontaneous boycotts of American-made goods in stores.

This disintegration—this sense that Canada can no longer rely on the USA as an open market, or even as a partner—matters immensely, and will guide Canadian policy in the years to come. Not imposing the tariffs does not mean that the two countries have returned to the status quo ante; instead, Canada is moving with alacrity to reduce its economic exposure to the United States; a move that will impoverish both countries, but one that seems imperative nonetheless. Discussion of what this might mean is everywhere. Here, in Changing Lanes, we will confine ourselves to the consequence most relevant to our interests:

Canada needs its own national strategy for driving automation.

Put another way, Canada cannot rely on the USA to do the work, and then simply endorse the approach the Americans have taken. Canada must determine for itself how to embrace and deploy this technology, for its own benefit.

Against this backdrop, this week the Canadian Automated Vehicle Initiative released A CAV Strategy for Canada, a white paper that I helped to produce; indeed, I co-chaired the committee that wrote it. The white paper outlines how Canada can establish its own leadership in automated vehicle development and testing. While many nations have developed, and are implementing, comprehensive strategies for this technology, Canada's approach is fragmented. This paper proposes a coordinated national framework to change that, one that leverages the country’s unique strengths in cold-weather testing, remote connectivity, and manufacturing integration.

In today’s newsletter, I’ll reproduce the white paper’s Executive Summary and a portion of the main text, which makes the case that a national strategy is warranted. I’ll close with some thoughts, unique to this newsletter, on the moment in which the white paper has arrived; that section will be of interest to all my readers, Canadian or not.

Executive Summary

Connected and Automated Vehicles (CAVs) represent the most significant transformation in automobile technology since its invention. Major automotive nations have begun large-scale CAV deployment, supported by comprehensive national strategies. Canada must act decisively to become an active shaper of this transformation rather than a recipient of technologies developed elsewhere.

The Canadian Automated Vehicle Initiative (CAVI), a national association of stakeholders from government, industry, academia, and civil society, advocates for developing a cohesive national CAV strategy. This white paper outlines CAVI's strategic framework for establishing Canada as a global leader in CAV development and deployment, with particular emphasis on our unique strengths in cold-weather operations and remote connectivity.

Canada brings significant strengths to the CAV landscape, including a robust automotive manufacturing sector employing over 100,000 people, excellence in academic research, and strategically located test sites.

However, Canada's approach has been fragmented, unlike those of its peer countries. The United Kingdom, for example, has successfully implemented a coordinated national approach through organizations like Zenzic and the Centre for Connected and Autonomous Vehicles (CCAV). In Australia, the Centre for Connected and Automated Transport (CCAT) is hosting the National Future Transport Summit in September 2025. This gathering will bring together senior leaders from Australian governments, industry, academia, and business to define a national pathway for the future use of CAVs.

By adopting a similarly-unified approach, Canada has an opportunity to establish a competitive advantage through unified national standards and coordinated development efforts.

The White Paper proposes six key initiatives:

• Create a Government/Industry Planning Body: Establish a central organization to drive CAV development nationally; coordinate efforts; and maintain a deployment roadmap through 2035

• Create the CAV Regulatory Framework: Develop comprehensive federal legislation that prevents fragmentation, while preserving appropriate provincial and municipal authority over traffic management

• Establish the Canadian CAV Centre of Excellence: Create a central technical authority to coordinate development, testing, and deployment nationwide

• Develop the National CAV Testing Network: Expand existing cold-weather facilities and establish new testing centers, supported by capital investment matched by provincial funds

• Launch a CAV Innovation Fund: Support Canadian companies developing CAV technologies, prioritizing solutions for winter operations and remote areas

• Build the CAV Skills Pipeline: Develop comprehensive training and education programs to ensure Canadians can seize CAV-related opportunities across multiple disciplines

The Case for a National Strategy

The development of CAV technologies offers Canada an unprecedented opportunity to enhance safety, productivity, and economic competitiveness. Through developing and implementing a well-structured national strategy, our nation can seize a leadership position in transportation's next revolution. Recent precedent demonstrates the value of coordinated national action in emerging technologies: in November 2024, the federal government created the Canadian Artificial Intelligence Safety Institute to leverage our country's strengths in AI and help develop AI effectively, responsibly, and safely.

The same principle applies to CAVs. We must create an appropriate policy and regulatory environment for this technology to flourish.

Fortunately, such an environment would align with and advance two of Canada's existing national priorities: strengthening our innovation economy and promoting social and regional development. To achieve these goals in the CAV context, however, we must also establish effective governance frameworks. The case for a comprehensive national CAV strategy thus rests on three fundamental pillars, two aspirational and one enabling: strengthening our innovation economy, advancing our social and regional development goals, and establishing the governance frameworks necessary to achieve both. Each of these pillars builds upon existing Canadian strengths while addressing critical gaps in our current approach.

Innovation Economy Benefits

CAV technology will advance multiple priorities under Canada's Innovation and Skills Plan while creating substantial economic opportunities. Most notably, it provides Canada with an opportunity to establish leadership in CAV certification and testing under challenging weather conditions. Building upon existing facilities in Thompson, Manitoba, and Ottawa, Ontario, these assets could form the foundation of a comprehensive testing network. While long-term climate change may affect winter conditions at these locations, the fundamental need to validate CAV systems under adverse weather conditions—including rain, snow, ice, and rapid temperature variations—will remain critical for global deployment.

Canada's unique combination of proximity to the U.S. market, diverse testing conditions, and existing automotive manufacturing base creates opportunities for specialized technology clusters. The potential exists to attract new assembly and R&D facilities focused on developing robust autonomous systems that can handle challenging environmental conditions. This could strengthen our existing capabilities in AI development, sensor technology, and specialized software solutions, while creating high-tech employment opportunities across the country.

In the logistics sector, CAV adoption promises transformative improvements to supply chain efficiency. By reducing human error - the leading cause of vehicular accidents - CAV systems can simultaneously enhance safety and reduce operating costs. CAV trucking could reduce costs by 15-25% while addressing the critical driver shortage (currently exceeding 25,000 unfilled positions, as per the Canadian Trucking Alliance). CAV trucking and logistics operations could also enable 24/7 operation capability and reliability improvements, enhancing the competitiveness of Canadian ports and logistics hubs, a key objective of the National Trade Corridors Fund.

Canada has particular strengths in automated vehicles operating in controlled industrial environments. Our resource sector has already demonstrated leadership in this area, with successful deployments in mining operations, oil sands facilities, and forestry applications. These achievements provide a foundation for broader CAV innovation, combining our expertise in robotics, harsh-environment operations, and industrial automation. Additional opportunities exist in other controlled environments such as airports, ports, agricultural operations, and renewable energy installations. These controlled settings offer ideal conditions for early CAV deployment while providing immediate productivity benefits and developing Canadian expertise that could be exported globally.

Social and Regional Development Benefits

CAV adoption could fundamentally reshape mobility in rural and remote communities. Where traditional transit is economically unviable, automated shuttle services could improve access to healthcare and educational facilities. The elderly would particularly benefit from enhanced mobility options, reducing isolation in rural areas.

People who are unable to drive due to economic or other factors could benefit from enhanced mobility options, reducing isolation in rural areas. However, without adequate and fulsome engagement with vulnerable future users of CAV systems the promise afforded through CAV and similar innovations in transportation may be, at best delayed, or more likely, simply left unrealized.

Healthcare offers a compelling early use case. By automating routine transportation needs while supporting aging-in-place initiatives, CAV technology could help control healthcare transportation costs. More reliable medical supply delivery to remote locations would strengthen healthcare resilience in underserved areas. People with mobility challenges, including those who are blind or have low vision, could experience increased mobility and independence when computers are doing the driving.

Northern and remote communities would see particular advantages through improved goods movement and reduced transportation costs for essential supplies. Better connections to southern markets could enhance economic opportunities. Additionally, CAVs could support resource sector operations and improve access to government services. These benefits align naturally with Canada's Arctic sovereignty initiatives and northern development priorities.

Governance and Implementation Requirements

The successful realization of these benefits depends on establishing robust governance frameworks at both federal and provincial levels. This governance structure must address three critical dimensions: regulatory harmonization, provincial capacity building, and cross-border coordination.

The complexity of Canada's federal system, combined with the inherently cross-border nature of transportation, makes regulatory harmonization essential. Within Canada, a unified federal framework would prevent the emergence of conflicting provincial regulations that could impede CAV adoption. Such conflicts are already emerging: Ontario permits pilots of car and light truck CAVs on its roads, and is developing a framework for larger trucks, including 18-wheelers. On the other hand, British Columbia has proactively banned Level 3 to Level 5 cars from public roads. Given that CAVs will routinely cross provincial boundaries, a patchwork of regulations would create significant operational challenges.

Provincial capacity building represents another crucial element. CAVs offer great promise but require careful, proactive, and sophisticated regulation. The expertise to deliver good outcomes in this regard is not spread evenly across the federation. Federal leadership would enable all provinces and territories to access essential resources and expertise, including:

• Access to testing and certification standards

• Training programs for certification and enforcement personnel

• Shared cybersecurity infrastructure and expertise

• A national reference guide defining the environmental and operational challenges that CAV systems must master for Canadian deployment

• Access to CAV data from across the nation, alongside standardized data-reporting requirements (respecting individual and corporate confidentiality)

At the international level, particularly within North America, harmonization of CAV standards and operations is inevitable. Individual provinces lack the capacity to engage effectively in complex international negotiations over cross-border CAV traffic. A coordinated national strategy would ensure Canadian interests and requirements are reflected in crucial agreements with the United States and Mexico, particularly regarding cross-border operations, safety standards, and data sharing.

Similarly, planning for CAV deployment provides an opportunity to clarify the roles and responsibilities in transportation. A clear federal framework would provide municipalities, provinces, and territories with implementation guidance and best practices. Such direction would help ensure consistency in traffic management and road-marking standards, upon which successful CAV implementation will depend.

As mentioned earlier, we recommend that Transport Canada provide stronger leadership and a clear federal framework that would prevent the fragmentation of CAV regulation at the provincial and municipal levels. Other federal countries have already taken similar steps. While cities must retain authority over their streets and traffic management, letting individual municipalities ban CAVs entirely would create an unworkable patchwork across Canada. The national framework should therefore establish CAV operation as a default right, while empowering municipalities to regulate specific aspects like speed limits, pickup/drop-off zones, and traffic management. This balanced approach would give cities the tools they need to manage CAVs effectively without allowing local opposition to block Canada's transition to automated transport.

Closing Thoughts

The circumstances in which the CAVI committee drafted this white paper are rather different from the ones we find ourselves in today. I can’t speak for the committee, nor indeed for CAVI; I am a member of the organization, but not an officer nor a member of its board. So I will speak only for myself.

Last fall, when my thoughts first turned to this subject, it seemed to me to be imperative that Canada develop a national strategy for driving automation in 2025. Two of its closest peer nations, the UK and Australia, had either done so or were well-embarked on it, which was reason enough. But what was more pressing was that the United States was preparing to do so. As I have written before, Elon Musk sees driving automation as the future of Tesla Motors. Given Musk’s influence on the new administration, I foresaw, long before the emergence of DOGE, that a robust federal strategy was likely this year, and it seemed to me that if Canada did not act, its decisions would be made for it; an American standard would become a de facto North American standard, and as is so often the case, Canada would follow while others led.

The dangers of this approach are now obvious. Canada cannot afford to let its sovereignty slip from drowsy hands, as it has been doing for the past several decades. In a darker age, without a certain and reliable partner, Canada must increase its productivity, diversify its markets, and build its own 21^st century economy. Driving automation is one opportunity for Canada to do all of these things at once. It should seize it.