Tesla poised to be early winner as Canada opens door to Chinese-made EVs
BEIJING/SHANGHAI, Jan 19 (Reuters) – Tesla is poised to be one of the first automakers to benefit from Canada’s move to eliminate 100% tariffs on Chinese-made electric vehicles, thanks to its initial efforts to ship cars from its factory in Shanghai and its established Canadian sales network, experts say.
Under the agreement announced last Friday, Canada will allow the import of up to 49,000 vehicles per year from China at a 6.1% tariff on most-favored country terms. Canadian Prime Minister Mark Carney said the quota could increase to 70,000 vehicles within five years.
However, according to a clause in the agreement, half of the quota will be reserved for vehicles under 35,000 CAD ($25,189). All Tesla model prices are above this figure.
While many Chinese automakers are eager to seize the opportunity as they expand exports, Tesla has an advantage as it has equipped its Shanghai facility, its largest and most cost-effective factory worldwide, to build and export a Canada-specific version of the Model Y in 2023.
The US automaker began shipping cars to Canada from Shanghai that same year, increasing Canada’s car imports from China to its largest port, Vancouver, by 460% year-on-year to 44,356 in 2023.
But it was forced to halt in 2024 and switched to shipping from U.S. and Berlin factories after Ottawa imposed 100% tariffs, citing a desire to counter what they called China’s deliberate policy of state-driven overcapacity.
It now ships Model Ys built in Berlin to Canada, but more variants like cheaper Model 3s are mostly built in China.
“This new agreement could allow those exports to restart fairly quickly,” said Sam Fiorani, vice president of research firm AutoForecast Solutions.
Tesla has an existing network of 39 stores in Canada, whereas Chinese rivals such as BYD and Nio do not yet have a sales presence here and can likely move more quickly with their marketing plans, as they only have four base models, far fewer than their Chinese rivals.
“Tesla really has an advantage in that it offers several models, versions and simple production lines, so it can have the flexibility to sell cars produced in any country in any market to achieve the best cost efficiency,” said Yale Zhang, managing director of Shanghai-based consultancy AutoForesight.
Tesla did not immediately respond to Reuters’ request for comment.
Other brands exporting Chinese-made cars to Canada before the tariffs included Volvo and Polestar, both owned by China’s automaker group Geely.
