As Canada’s Environment Minister Peter Kent attempted to control emissions by setting a regulation that requires the vehicles built between 2017-2025 to cut emissions by five percent each year, Car makers faced enormous threats as they tried to design new models of passenger cars that match the standard.

Mark Nantais, the head of the Canadian Vehicle Manufacturers’ Association explained that the regulation provided Canadian car industry a chance to “harmonize with the large U.S. car industry.” Car manufacturer Toyota, also took this threat and turned it into an opportunity by adding innovation into their design. The new 2013 Toyota Prius, show-cased at the New York auto show, is a plug-in hybrid car that can be powered by the gasoline engine, as well as the electric motor.

Hybrid car is an example of the result of government regulations in a free market, which, when left alone, often strives to achieve the maximum economic surplus without considering the after effects on the environment. Government regulations can sometimes set direction and challenges to the industry. This forces the companies to become fast reacting innovators with new strategies and business plans, and in the end, the threats will eventually become a strength.

Websites:
http://www.cbc.ca/news/how-do-you-make-car-companies-innovate-regulate-them-1.1869940
http://www.cbc.ca/news/politics/new-vehicle-rules-to-cut-emissions-fuel-consumption-1.1264623