Chinese EVs Are Coming

Let the hand-wringing and clutching of pearls begin. China will be allowed to sell up to 49,000 electric vehicles (EVs) in Canada starting in March of this year. North American (mainly American) interests are hitting this hard, wailing about the demise of the Canadian auto industry.

For those who have had their heads in the sand, the Canadian Auto Industry as we know it will never be the same again, and it won't be because of Chinese EVs. It's because of Donald Trump.

In one quarter last year, Ford Motor Company took a two billion dollar charge because of tariffs. General Motors is expecting a charge of $4-5 billion for all of 2025, and Stellantis, the car company formerly known as Chrysler/Dodge/Jeep, just under $2 billion. This isn't sustainable. And this is with about 80% of car parts tariff free under the Canada/US/Mexico Trade Agreement (CUSMA). Which, incidentally, Donald Trump has proclaimed as one of the worst deals in the history of the United States (you know, the trade agreement that HE signed?) and that Canada and Mexico have taken advantage of the United States.

Already, GM has eliminated a shift at their Oshawa plant. They have closed their Ingersoll plant that made fully electric trucks, citing lack of demand.

Ford was supposed to convert their Oakville assembly plant to make EVs. When the Trump administration eliminated the tax rebate on new EVs, Ford pivoted to building F-250 medium duty pickups.

Stellantis accepted more than a billion dollars to retool their Brampton plant to produce EVs. They've since mothballed the plant and have no plans for any vehicle production. No word yet on any repayment of funds received to date.

Back in 2009, GM Canada received about 10 billion dollars from various levels of government to bail them out during the financial crisis. They've received more than $500 million in other subsidies since to keep Oshawa and Ingersoll running. Ford received almost $600 million to re-tool Oakville for EV production, but changed over to the F-250 program without so much as a comment from government.

Volkswagen has received about $1.2 billion from the federal and Ontario provincial governments to build a battery plant near St. Thomas, Ontario, with further subsidies of $15-17 billion promised in the future tied to actual production. Plus another $10 billion or so for a battery plant for Stellantis near Windsor which is actually now producing batteries for use in EVs.

My point here is that one of the complaints about Chinese EVs is that their production is heavily subsidized. I wouldn't call multiple billions of dollars to so-called "domestic" i.e. American companies chump change. I don't have a figure on subsidies on EV production in China. It could be more, it could be less that the American companies received. But both countries subsidize their respective manufacturers so that argument is a non-starter.

What about privacy? General Motors sold data harvested from their vehicles to data brokers who in turn sold the data on to insurance companies so that the companies could raise their clients' rates based on driver habits. Technically, everyone whose data was sold had given permission to GM to do this, but the permission was buried in legalese that clearly most people never read. The irony is that drivers who paid GM for their OnStar service on a monthly subscription actually subsidized the collection of their own data.

Sure, car companies can use their vehicle to surveil their owners. Google and Apple know exactly where you are if you have location services turned on your devices (most people do or mapping won't work) and already listen in using smartphone and computer microphones when you trigger the "Hey Siri" or "Hey Google" commands but inadvertent activation also gets recorded and fed into your profile.

Tesla has camera systems all over their vehicles, feeding back to their servers to help train their autonomous driving systems. There's no reason Trump couldn't use this data for his own pursuits. Similarly, the tech companies could bypass the user's ability to turn off smartphone cameras and microphones, and use this data for surveillance. So this argument against Chinese EVs is, in my mind, also moot.

The number of EVs that Canada is letting in is small, about 3% of sales. There is only one domestic EV built, and that's a $100,000 Dodge Charger which simply doesn't sell at that price point. Everything else is imported. So how will 49,000 EVs from China hurt Canadian domestic manufacturing? Half the new vehicles sold in Canada are light-duty pickups. These buyers aren't in a rush to buy a BYD Seagull which is about the size of a Toyota Yaris. They don't make competitive light-duty pickups. Sure, this might affect Honda Civic production, but not likely by much. Speaking of Honda, they killed postponed their EV investment in Alliston, Ontario because of the perceived soft market for EVs in North America and the cost of tariffs to sell Canadian production into the United States.

This leaves us with a domestic industry that has no interest whatsoever in building electric vehicles, a hostile U.S. government that tariffs current vehicles and security concerns with both U.S. and Chinese made vehicles, which to me is a wash.

This also recalls the voluntary quotas on the sale of Japanese cars in the 1980s. Japan had captured about 28% of the Canadian market by producing reliable, affordable cars. This alarmed Canadian vehicle manufacturers who convinced the Canadian government to lobby the Japanese government to restrict vehicle exports voluntarily, with the threat of tariffs or quotas if they didn't comply. This accomplished two things:

1) Japanese manufacturers established Canadian plants to appease the Canadian government

2) It raised prices for everyone because the transaction price for any Japanese car sold during this time was at full list price with no discounting. This allowed domestic manufacturers in turn to raise their prices with the Canadian consumer losing out.

Cars from China creates this scenario all over again. The arguments about lower Chinese wages and a lower standard of living putting the Chinese vehicles at an advantage to well-paid Canadian workers will ultimately mean higher car prices for everyone by restricting supply from China.

By the way, if you want to bang the human rights drum about China, keep in mind that the U.S. government detained more than 200 Canadian citizens in 2025 by Immigration and Customs Enforcement and there are more than 50 Canadians currently incarcerated on immigration charges.

Like Prime Minister Carney said, we have to deal with the world as it is, not as the world we wish it to be. This agreement will allow fisheries and farmers to sell their products at far reduced tariff rates into China. The U.S. market simply isn't available to us anymore.

It's ironic that China may turn out to be a more reliable trading partner than the United States. These are very odd times.