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(Bloomberg) — At least four Chinese carmakers are looking at how to use Canada’s low-tariff import quota for their electric vehicles and are interested in domestic manufacturing partnerships, Industry Minster Melanie Joly said.
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Joly traveled to China last week and met with officials from BYD Co., Chery Automobile Co., Zhejiang Geely Holding Group Co., and Shanghai Launch Automotive Technical Co., she told reporters Monday.
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Her trip followed Prime Minister Mark Carney’s January visit to Beijing, where he unveiled a trade pact that allows as many as 49,000 Chinese-made EVs to enter Canada under a tariff of about 6% — scrapping the additional 100% tariff imposed on the cars in 2024.
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As part of the deal, Carney also said his government is looking to attract Chinese investment into the Canadian auto sector.
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Joly told reporters that all the companies she met with are “willing to explore creating joint ventures in Canada in order to produce in Canada.”
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But she reiterated that it would have to take place under certain conditions, including that the joint venture be Canadian-controlled and have a localized supply chain.
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“We need to make sure that we are able to do this right,” she said, pointing to her ministerial oversight of the Investment Canada Act, which allows her to set conditions on sensitive foreign investments in Canada.
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Carney’s government has held discussions with Stellantis NV about building Chinese EVs in an idled plant in Brampton, Ontario, Bloomberg has reported.
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The cars would potentially be produced through Stellantis’ joint venture with Chinese firm Zhejiang Leapmotor Technology Co., but it’s unclear whether the company can meet Joly’s terms for localized production. After news of the talks emerged, Joly said she would reject “cars in a kit,” where the parts are built overseas and shipped to Canada for final assembly.
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Meanwhile, Chinese-made EVs began entering Canada under the new low-tariff quota in May, but so far the vast majority are Tesla Inc. cars made at the US automaker’s Shanghai factory.
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The Canadian government is still deliberating over how to allocate the quota, and may put a limit on how much one automaker can use to ensure that multiple firms are able to take advantage.
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Canada’s auto industry has been hit hard by US tariffs and a pullback in EV investment. Last month, Honda Motor Co. indefinitely suspended plans to build a C$15 billion ($10.6 billion) EV battery supply chain in Alliston, Ontario.
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Joly struck an optimistic note about Honda’s plans for the community.
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“I’m confident good news is coming,” she said. “I know that there’s a lot of anxiety in the auto sector, but to those working in Alliston, we have your back and we’re working with the company.”
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