A BYD booth draws a crowd of onlookers at the South China International Auto Show in Guangzhou on May 1, 2026.
For Chinese electric vehicle (EV) manufacturers expanding globally, Canada has shifted from a closed door to a limited but strategic opening. In mid-June, Industry Minister Mélanie Joly visited China and told companies including BYD, Chery, Geely, and Shanghai Launch Automotive: "Build where you sell." This is not merely a slogan. It comes with conditions: any venture must be a majority‑Canadian joint venture, use Canadian parts, follow Canadian labor standards, and meet other requirements.
The breakthrough came in January, when Prime Minister Mark Carney's government agreed to allow the import of up to 49,000 Chinese‑made EVs into Canada this year, subject to a 6.1% tariff. The quota is modest, accounting for less than 3% of Canada's annual market, but symbolically important. It reopened a channel that had been shut in late 2024, when Canada mirrored the US tariffs, and China retaliated with duties on canola and pork. The deal also lifted those agricultural tariffs, creating a win‑win outcome.
Chinese automakers are testing the waters. BYD is recruiting for Canadian showrooms. Geely and Chery have shipped test units, while Stellantis has considered using its idled Brampton plant through its Leapmotor joint venture. The building blocks are in place; what is needed now is the “connective tissue” to turn talks into actual investment.
Canadian debates often drift into alarms: market flooding, industrial hollowing, Trojan horses, and data pipelines to Beijing. However, such narratives ignore a key fact: the quota's biggest beneficiary so far has been Tesla's Shanghai factory. Chinese‑assembled Teslas easily clear Canadian customs, link to Canadian phones, and run on Canadian roads. If that is acceptable, objections to other Chinese EVs appear less about telemetry than about brand origin. Chinese companies should not be deterred. They should address concerns through transparency and compliance.
Critics also overlook the cost of the status quo. Honda recently shelved a C$15‑billion EV plan for Alliston, citing uncertainty around the Canada-United States-Mexico Agreement (CUSMA), US tariffs, and competition from "new entrants." The first two factors, not the small quota, pose the real threat to jobs. It is unrealistic to believe that a freeze on Chinese participation can restore stability.
Canada is not offering an open door. Joly's conditions form a framework, but Chinese automakers will not sink hundreds of millions into Canadian plants, hire local workers, buy Canadian steel and aluminum, and build supply chains without policy certainty. Rules cannot flip with every election or CUSMA review. If Canada wants to promote "build where you sell," it must provide a stable environment.
A shared charging station in Guangzhou on June 22, 2026
A China-Canada EV working group could bridge this gap. Rather than another ministerial visit or additional documents, an expert‑level, jointly appointed body that provides recommendations to both governments could translate broad conditions into actionable details. For Chinese stakeholders, it would offer a predictable channel to resolve concerns before they harden into barriers.
The group could perform three functions. First, it could analyze how other advanced economies have handled the entry of Chinese EVs. The UK stayed open. The EU used calibrated tariffs, later shifting to minimum‑price commitments and joint ventures, including Renault with Geely, BMW with Great Wall, and Magna assembling XPeng in Austria. Australia absorbed a large influx without a security crisis. Each model has its trade‑offs. Chinese policymakers can learn from these examples, identifying what worked, where, and why, before tailoring an approach for Canada.
Second, it could convert abstract security concerns into practical protocols. Modern EVs are rolling sensors, but "data security" is not a simple yes-or-no issue. It involves design choices: where the source code is held, who controls updates, whether data can be routed through a Canadian gateway, and which telecom modules are certified. These are solvable problems. A bilateral track could adapt proven solutions to comply with Canadian law and meet US expectations.
Third, it could advise on quota design. The first 24,500 licenses, released on March 1 on a first‑come basis, favored incumbents with established logistics, such as Tesla Shanghai. This approach disadvantaged Chinese brands still certifying vehicles and building networks. If the goal is to encourage genuine new entry and local assembly, the allocation strategy must evolve. Options include set‑asides for new entrants, tiered quotas linked to Canadian investment, and brand-specific caps to preserve diversity. Smart design would prevent the quota from becoming a conduit for existing players.
Underlying all this is a plain truth: Chinese EV makers are profit‑driven. They will not invest heavily if policy signals suggest that the welcome mat could vanish when Washington acts. Market forces apply. Returns must be demonstrable, and risks should be manageable. Canada offers a small but affluent market, a skilled workforce, and potential access to North American supply chains, provided the regulatory environment is stable.
This does not mean accepting unfair terms. Majority‑Canadian joint ventures, Canadian labor standards, local-content requirements, and auditable data rules are legitimate. However, they should be negotiated as part of a broader bargain: in exchange, Canada provides a predictable runway, a quota framework that rewards investment, and a diplomatic posture that does not treat every Chinese vehicle as a security threat.
National flags of China and Canada are displayed in Tiananmen Square in Beijing on January 16, 2026, to welcome Canadian Prime Minister Mark Carney's visit to China.
Relations between Beijing and Ottawa are improving. Carney's January visit, Joly's recent trip, the quota deal, and the easing of agricultural restrictions are small but cumulative steps. Chinese companies should view this as a cautious opening, not a gold rush. The Canadian market alone cannot absorb massive volumes, but success there could serve as a template for other developed economies.
The opportunity goes beyond selling cars in Canada. It is to demonstrate that Chinese EV technology can operate transparently within rigorous regulatory environments, create local jobs, and integrate into allied supply chains. By embracing joint ventures, committing to data security, and participating in a bilateral working group, Chinese automakers can turn "build where you sell" into a sustainable strategy.
For Chinese policymakers and industry leaders, the task is to engage constructively, seek clarity, and invest where returns justify risks. Canada may not be the largest prize, but it can offer valuable lessons. A smart approach today could pave the way for a more resilient global footprint tomorrow.
Wenran Jiang is the founding director of the China Institute, and MacTaggart Research Chair Emeritus at the University of Alberta. He is president of the Canada-China Energy and Environment Forum and an adviser at the Institute for Peace and Diplomacy.
Photo | CFP
