Chinese electric vehicles are now making their way to Canada, with almost 400 dealers competing to sell them.

      **TL;DR:** Canada has reduced tariffs on Chinese electric vehicles (EVs) to 6.1% with an annual limit of 49,000 units. Almost 400 dealerships are interested in selling brands like BYD, Geely, and Chery.

      Michael MacGillivray, CEO of Century Auto Group and Sigma Auto Group, manages 10 dealerships in Nova Scotia and New Brunswick. In April, he attended the Beijing Auto Show to meet with Chinese manufacturers and test their vehicles, returning impressed with their quality and design. MacGillivray aims to be one of the first Canadian dealers to offer imported Chinese EVs.

      He is not the only one. Farid Ahmad, CEO of DSMA, an auto dealership brokerage in suburban Toronto, reports nearly 400 inquiries from dealers across Canada eager to represent Chinese brands such as BYD, Geely, and Chery. “This gives them an opportunity in the North American market,” Ahmad stated.

      The change stems from a trade agreement made in January between Canadian Prime Minister Mark Carney and Chinese President Xi Jinping, which saw Canada reduce its tariff on Chinese EVs from 100% to 6.1%, the country's most-favored-nation rate for the first 49,000 vehicles imported each year. Anything exceeding this limit will still incur the 100% tariff starting in October 2024. In return, China lowered tariffs on Canadian canola from 85% to about 15% and lifted tariffs on Canadian rapeseed meal, lobsters, crabs, and peas.

      The quota is organized on a March-to-February yearly basis, divided into two six-month periods of 24,500 permits each, allocated on a first-come, first-served basis by the Canada Border Services Agency. The 49,000-unit limit represents less than 3% of Canada’s annual new vehicle market, which exceeded 1.9 million sales last year. By 2030, the quota is expected to increase to 70,000 vehicles, and the Canadian government aims for at least half of the imports within the quota to be affordable models priced below C$35,000 (about US$26,000) within five years.

      The first Chinese vehicles have already arrived. Chery has delivered cars from its sub-brands Jaecoo, Omoda, and Exelantis, and Geely-owned Lotus has supplied 18 Eletre electric SUVs, reportedly the first Chinese-made cars to come under the new trade agreement. The Canadian price for the Lotus Eletre dropped about 50% following the tariff cut. BYD has also registered vehicles manufactured in Shenzhen and Xi’an with Transport Canada. A BYD Seagull priced at C$12,000 ex-factory could reach Canada for approximately C$14,000 after the 6.1% tariff and shipping, potentially selling for C$20,000 to C$25,000, transforming a currently non-existent sub-C$30,000 EV segment in Canada.

      The political reaction has been strong. The Canadian Vehicle Manufacturers’ Association, representing GM, Ford, and Stellantis, expressed deep concern, arguing that Chinese state subsidies undermine domestic competitors and that connected vehicle hardware poses security risks. Ontario Premier Doug Ford labeled the imported vehicles as “spy vehicles.” In the US, over 120 House lawmakers signed a letter to President Trump requesting a ban on Chinese automakers, and bipartisan legislation introduced on May 12 would prohibit imported connected vehicles and components related to China.

      Trump criticized Canada’s move as “a disaster.” US Transportation Secretary Sean Duffy commented on X that “Canada will regret allowing the Chinese Communist Party to saturate North America with their EVs.” However, Trump’s stance has been inconsistent; shortly after his criticism, he acknowledged at a White House event that Carney was correct to secure a trade agreement with China and expressed interest in permitting Chinese automakers to establish factories in the US.

      Chinese EV content has already begun to saturate American TikTok and YouTube, driving consumer interest in vehicles that cannot legally be sold in the US. Canada's decision to ease entry means North Americans can now visit Canadian dealerships to experience BYD or Chery vehicles in person, despite not being able to purchase them at home. This geographic closeness intensifies pressure on US policy, which currently relies on a 100% tariff to prevent Chinese vehicles from entering a market where the average new car price exceeds $49,000.

      Michael Robinet, S&P Global Mobility's vice president of forecast strategy, described the Canadian strategy as cautious. “A 3% to 5% market share is substantial, yet it won't significantly alter the competitive landscape,” he said. Nevertheless, the plan is set to escalate: the quota will increase to 70,000 by 2030, and Chinese manufacturers must form joint ventures in Canada within three years, with tightening affordability requirements over time.

      BYD surpassed Tesla to become the world's top EV