Opinion: Chinese EVs in Canada? Keep calm and carry on

Electric vehicles for export at a port in Hangzhou, in eastern China's Zhejiang province. Photo by AFP via Getty Images files

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China’s electric vehicle (EV) manufacturers have been at the heart of Canadians’ discussions surrounding recent federal government announcements about EVs in Canada, but are they worth all the attention?

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It all began with a preliminary agreement-in-principle between Canada and China during Prime Minister Mark Carney’s visit to Beijing in mid-January.

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Under this “deal” (to use Donald Trump’s terminology), Canada plans to allow up to 49,000 EVs to be imported from China at a tariff rate of 6.1 per cent, increasing to 70,000 over a five-year period. In exchange, China agreed to reduce its tariff levels on key Canadian products such as canola seeds, peas, lobsters and crabs.

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The new tariff rate on Chinese EVs is the same that Canada applied before adopting a tariff rate of 100 per cent on Chinese-made EVs on Oct. 1, 2024, in response to pressure from the United States.

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The federal government anticipates that more than half of the imported EVs from China will cost less than $35,000 in five years, which would help Canadian consumers who can’t afford a new car anymore, given that the average price of a new car in Canada is $63,665.

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In response, industry and labour leaders and Ontario Premier Doug Ford have complained that the deal will lead to job losses by undercutting domestically produced cars and parts. The industry is already facing struggles because of renewed U.S. protectionism under Trump 2.0.

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Then, last week, Carney announced his government will scrap the EV sales mandate, which requires 60 per cent of all new cars in Canada to be zero-emission vehicles (ZEVs) by 2030 and 100 per cent by 2035.

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Instead, it will adopt more stringent emissions standards for vehicles and reintroduce incentives to purchase ZEVs, but only for those built in Canada or in countries with which Canada has a free-trade agreement, thereby excluding imports from China.

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With this new strategy, which also includes tax incentives, the federal government expects significant investments by automotive manufacturers, including Chinese ones, to produce ZEVs in Canada.

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So, who’s right? The federal government, which sees Chinese EV manufacturers as strategic partners, or those who see competition from China as detrimental to Canada’s auto industry?

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In the short term, the deal with China doesn’t mean much since 49,000 vehicles only represents about three per cent of vehicles sold in Canada. Moreover, it’s far from obvious that the quota will be rapidly filled.

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In the year before it imposed a 100 per cent tariff on Chinese EVs (October 2023 to September 2024), Canada imported 31,658 EVs from China, and this was before the federal government paused its incentive program.

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It is also important to consider the kind of cars Canadians like. They are abandoning passenger cars in favour of SUVs, light trucks and minivans, which are the vehicles assembled in Canada for the most part. The sale of passenger cars has declined by more than half between 2018 and 2024.