Even with Carney’s new deal, don’t expect to buy a cheap Chinese EV any time soon

To say that Prime Minister Mark Carney has opened the door to Chinese electric vehicles is unfair. He cracked the door open, just a little, and is letting China once again have a peek at the Canadian car market. That’s it, for now.

Nothing about the recent deal means the sky is falling on Canada’s auto industry, nor does it mean Canadian drivers will suddenly enjoy a raft of cheap Chinese EVs. (Sorry to everyone already picking out a colour for their BYD Seagull, which sells for less than $15,000 in its home market.)

The Prime Minister and Chinese President Xi Jinping reached a deal that will allow 49,000 Chinese EVs into Canada at a tariff rate of 6.1 per cent, down from the 100-per-cent tariff Canada imposed on Chinese-made EVs in 2024, following a move by the U.S.

“This is a pretty limited small scale thing,” said Dimitry Anastakis, the LR Wilson and RJ Currie chair in Canadian business history at the University of Toronto.

As a result, it’s unlikely to threaten the livelihoods of any Canadian autoworkers. As it stands, U.S. President Donald Trump’s all-out attack on Canadian auto workers is still, by far, the main threat to the auto manufacturing sector in this country.

“On the manufacturing side, it has no impact because in Canada we don’t build anything like that,” Anastakis said, speaking about the affordable EVs that are so ubiquitous in China. (The one made-in-Canada EV is the high-performance Dodge Charger Daytona, which starts at more than $50,000.)

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The federal government expects the deal with China will “catalyze considerable new Chinese joint-venture investment in Canada” although why that would be the case, the government has yet to say.

So Canadian auto workers can rest easy – or, at least as easy as they have been as they see their jobs slipping away to the U.S. – but at the same time Canadian consumers shouldn’t get their hopes for a fresh wave of more affordable EVs. At least not yet.

Carney said part of the Chinese EV quota will be reserved for cars that cost $35,000 or less. By 2030, half of Chinese EV imports will be in that affordable category, he added, saying it will kickstart “the availability of more affordable electric vehicles in Canada.”

But, will it?

Consumers shouldn’t get too excited; Carney’s deal doesn’t necessarily mean you’ll be able to put a $15,000 or $20,000 EV from BYD or Geely in your driveway anytime soon, if ever.

“If anybody’s thinking that A) there will be Chinese vehicles on the road in the next few weeks and B) that they’re going to be cheap, they’re probably being a little naïve,” said Greig Mordue, an associate professor at McMaster University specializing in advanced manufacturing and public policy.

The problem for consumers – and also the saving grace for Canada’s auto manufacturing industry – is that 49,000 vehicles is a relatively small amount. Last year 1.9 million new vehicles were sold in Canada. Just under 6 per cent of them were pure battery electric vehicles, according to the latest StatsCan data.

It’s not clear how the 49,000 vehicles will be allocated among various Chinese manufacturers or whether it’ll be a free for all, but even if one company manages to grab a big slice of the 49,000 total – say 7,000 cars – it’s hard to justify setting up a national dealer network just for that handful of units.

“If I’m a Chinese automaker, I’ve got to make this is worth my while,” Mordue said. “I can’t ask somebody to invest in a car dealership that’s going to sell 35 cars a year. I can’t ask them to invest $5-million to do that.”

Which is why the likes of BYD, Xiaomi and other Chinese brands might not chose to enter the Canadian market just yet, despite the fact Carney has cracked open the door.

Instead, what’s more likely, is that Canadians will get a raft of made-in-China EVs from brands already operating in our country. Think: Chinese-made Teslas, Buicks and Volvos, perhaps some Chinese Volkswagens too. It’s not clear yet if any of them would need to be in the $35,000 and under category; it depends on how the affordable car quota works.

Remember too that any vehicles sold in Canada also need to meet our crash and safety standards. It’s prohibitively expensive to meet those standards for any car that wasn’t designed for the North American market to begin with.

If a Chinese brand such as BYD does decide to jump through the little crack Carney has opened for them, wouldn’t they prioritize their most profitable (read: expensive) EVs in order to maximize the return on their share of the import quota?

There’s a precedent here, sort of. Back in the early 1980s, the number of Japanese cars allowed into Canada was restricted to a certain number of units. The Japanese brands responded by moving upmarket and pushing more expensive models.

“From memory, in 1979 the average transaction price for a Japanese vehicle in Canada was $8,000,” said Mordue. “By 1982 or ‘83 it was $14,000. [Honda] sold fewer Civics and a lot more Accords, because there’s more money in an Accord than there is in a Civic,” he explained.

Unless a Chinese brand wants to take a big risk by investing a huge amount of money to sell a small number of low-cost EVs in Canada – perhaps as a long-term play to ingratiate the brand to Canadian drivers and/or to catch the eye of U.S. consumers – it seems unlikely Chinese brands would chose to offer their most affordable products here.

The big winner here? Canola farmers, and perhaps Mark Carney’s political future.

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