Canada and China strike deal to allow Chinese made EVs into Canada

Up to 49,000 Chinese made EVs will be allowed into Canada at the most-favoured-nation tariff rate of 6.1%. In October 2024, Canada introduced a 100% tariff on EVs from China, following the US’s imposition of the same policy in May of the same year.

In 2025, the Canadian EV market declined 41% compared to 2024. Largely due to its EV subsidy scheme ending in mid-January 2025 and the deteriorating trade relationship between the US and Canada.

Who will benefit from this policy?

Historically, Canadian EV imports from China have been dominated by Tesla with Geely being the only other OEM to export EVs from China through Polestar and Volvo. In the immediate term, Tesla and Geely will gain the greatest benefit from the reduced tariff rate as both OEMs have already established networks in Canada. Something others will have to take the time to set up in a market that has largely been closed to Chinese EVs.

The policy also provides Tesla with a unique opportunity to import vehicles into Canada at a lower tariff rate than what is currently faced by their vehicles made in the US. Considering its sales collapse in the country in 2025, this is something tesla will likely look to take advantage of.

The reduced tariff rate also presents the opportunity for more affordable EV models to enter the Canadian EV market. The Canadian government anticipates that by 2030, half of its EV imports from China will be priced under CAD35,000 (USD25,300). To date, the Canadian EV market has closely followed the US, where EV development has focused on large SUVs and pickup trucks.

Will BYD take over?

BYD aims for 50% of its sales to come from markets outside of China by 2030. In pursuit of this, it has expanded significantly into numerous emerging markets, gaining significant market share in a short period of time. It is also growing its market share in Europe, despite the region’s imposition of tariffs on Chinese made EVs.

The Canadian market certainly presents an opportunity for BYD with its product offering being unlike anything Canadian consumers have yet been exposed to. However, it will take time for BYD to establish the trade flows and networks to be able to distribute EVs within Canada. Many of the EV markets that BYD has come to dominate quickly have lacked competition, whereas the Canadian EV market has numerous American, European and Asian OEMs already operating. Even if BYD was able to claim all 49,000 units of the quota, that represents less than 3% of Canada’s total vehicle market.