Four Chinese automakers are assessing options to make use of Canada's low-tariff import quota for electric vehicles and are weighing partnerships to manufacture locally, Industry Minister Melanie Joly said on Monday following her trip to China.
Joly met with representatives from BYD Co., Chery Automobile Co., Zhejiang Geely Holding Group Co., and Shanghai Launch Automotive Technical Co. during the visit. She said each of the companies she engaged with is "willing to explore creating joint ventures in Canada in order to produce in Canada."
The meetings come after Prime Minister Mark Carney's January visit to Beijing, when he announced a trade arrangement that allows up to 49,000 Chinese-made electric vehicles to enter Canada under a tariff of roughly 6%. That agreement removed an additional 100% tariff that had been applied to the vehicles in 2024.
As part of the agreement, the federal government is pursuing Chinese investment in Canada's auto sector. Joly said any production partnerships would have to satisfy specific conditions, including Canadian control over the joint venture and a localized supply chain. She added, "We need to make sure that we are able to do this right," citing her authority under the Investment Canada Act to impose conditions on sensitive foreign investments.
Joly also described ongoing conversations with Stellantis NV about the potential to use an idled assembly plant in Brampton, Ontario, to build Chinese-made EVs. Those vehicles could be produced through Stellantis' joint venture with Zhejiang Leapmotor Technology Co., she said. In that context, Joly reiterated her opposition to so-called "cars in a kit," where components are manufactured abroad and only final assembly takes place in Canada.
Under the new low-tariff quota, Chinese-made electric vehicles began entering Canada in May. Joly noted that the majority of those vehicles have been Tesla Inc. cars manufactured at the company's Shanghai factory.
Separately, Honda Motor Co. last month indefinitely suspended plans for a C$15 billion battery supply chain project in Alliston, Ontario. Speaking about the situation in Alliston, Joly said, "I'm confident good news is coming," and added, "I know that there's a lot of anxiety in the auto sector, but to those working in Alliston, we have your back and we're working with the company."
What this means
The minister's comments indicate active engagement between Canadian officials and multiple Chinese EV manufacturers on both the use of the tariff quota and the potential for local production partnerships. Any move toward manufacturing in Canada would be subject to explicit conditions intended to secure Canadian control and boost local supply-chain development.
At the same time, uncertainty persists around major projects and plant utilization, as seen in the suspension of Honda's battery supply-chain plans and the ongoing evaluation of opportunities for a dormant Brampton facility.