by New Trade Deal
Thanks to a new large-scale trade deal between Canada and China, electric vehicles imported from China will now be subject to a duty of just 6.1 percent instead of the previous hundred-percent tariffs. This sharp reduction makes Chinese electric vehicles significantly more affordable for Canadian buyers. However, the automaker that may benefit the most might not be Chinese. In fact, the real winner could be Tesla.
Deal Terms and Impact on Tesla
The deal allows for the annual import of up to 49 thousand vehicles at the reduced tariff rate, with the possibility of increasing this number to 70 thousand over five years. Tesla already began exporting vehicles from its Shanghai factory to Canada in 2023, but these efforts faced obstacles when tariffs sharply increased in 2024. This forced the company to redirect production of vehicles for the Canadian market to its factories in the USA and Germany.
Now that the trade doors are open again, Tesla has a clear path to resume production in Shanghai of models destined for Canada and their delivery. In 2023, the company shipped over 44 thousand electric vehicles from China to Canada, putting it in a good position to return to the market. Thanks to its production capacity in Shanghai and its already established sales infrastructure in Canada, Tesla is likely to be one of the first to take advantage of the new rules.
Deal Limitations
However, the deal has an important condition. According to one of the clauses, half of the annual quota of 49 thousand vehicles is designated for cars priced below 35 thousand Canadian dollars. Since Tesla currently does not offer any models in that price range, it will not be able to occupy the entire quota on its own.
Other Benefits and Uncertainty
Geely is also expected to benefit from the tariff change, especially through the Polestar and Volvo brands. As reported, Transport Canada has also confirmed a reduction in bureaucratic procedures, meaning new Chinese electric vehicles will be certified for local sale in just eight weeks.
It remains unclear exactly how the Canadian government will allocate the quota of 49 thousand vehicles among different automakers. Will Tesla and Geely try to fill the limit with Chinese electric vehicles? This question remains open for now. In any case, the trade deal is good news for those interested in leading Chinese electric vehicles.
This change in tariff policy reflects a broader trend of global transformation in the electric vehicle market, where production logistics and international deals can create unexpected winners. The condition regarding budget cars in the quota indicates the Canadian government’s attempt to ensure electric vehicle affordability for a wide range of consumers, which could open doors for other Chinese brands focused on the economy segment. The success of the deal will also largely depend on how quickly manufacturers can adapt their supply chains and model lineups to the new rules to fully utilize the presented opportunities.
