EVs And The North American Auto Industry — A Canadian Perspective

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A tidal wave of tidbits infiltrates my email inbox every morning. Today I found an interesting story in something called The Walrus, which bills itself as “Canada’s Conversation.” Whether the title is an homage to the Walrus and the Carpenter scene in Alice in Wonderland or a reference to a lyric in a certain Beatles song is unknown. Perhaps one of our Canadian readers can explain it to us.

An article in The Walrus published on July 21, 2026, explores the policy instituted by the Carney government that allows up to 49,000 Chinese-made cars to be imported into Canada each year at the normal tariff of 6.1 percent. However, former Prime Minister Justin Trudeau imposed an additional tariff of 100 percent on cars imported from China, a policy that mirrored that of the US, which imposed a similar tariff during the Biden administration.

Since then, an insane tariff war has broken out between the two countries, with tit for tat increases happening on a regular basis. This week, the lunatic posing as the president of the United States woke up in a bad mood and decided to slap an additional 50 percent tariff on many Canadian products. He has also blustered about perhaps revoking the current multi-lateral trade deal between Canada, the US, and Mexico that allows goods from those countries to be shipped to either of the other two countries duty free.

The biggest beneficiary of that arrangement has been US automakers, who can manufacture vehicles and components in Canada or Mexico and sell them in the US without paying import duties on them. It should be noted the alleged president negotiated the current trade agreement himself during his first term in office, not that logic plays any role in his decision making from one moment to the next.

A Marriage Of Convenience

It is no exaggeration to say that the US and Canadian auto industries are one and the same, as they are essentially one enterprise bifurcated by the Detroit River. A truck assembled in the US may be shipped across the border to be fitted with an engine or seats manufactured in Canada and vice versa.

Armchair analysts are warning that the decision to admit 49,000 Chinese EVs into Canada will decimate the country’s auto industry, but The Walrus says the impact will be far more nuanced than that. Statistics Canada reports that sales of zero-emission vehicles rose nearly 75 percent year over year in March, reaching 12.2 percent of all new vehicle sales. That is half the 25 percent globally but more than double the rate in the US.

The Walrus asks, “Can the country protect auto jobs and make room for lower-cost EVs in a market where price remains one of the biggest barriers to going electric? What happens when Canada tries to make EVs more affordable before the market around them — rebates, charging, repairs, insurance, financing, and industrial policy — is fully settled? In essence, what lies beyond the geopolitical spectacle of Carney’s deal making in China to diversify Canada’s United States–anchored auto policy?”

Rachel Doran, executive director of Clean Energy Canada, a climate and energy think tank based at Simon Fraser University, told The Walrus the global EV market is moving much faster than Canada’s. EVs may be cheaper to run because electricity costs less than gasoline, but the problem in Canada is the upfront price. Doran says there has been a real affordability gap. “People, and particularly younger Canadians, are interested in adopting electric vehicles, but the price has to be right.”

She sees Chinese EVs playing a role — not as the whole answer, and not as a reason to abandon Canadian manufacturing — but as a force that could push automakers to compete harder on price. In Europe, Doran says, the arrival of some Chinese EVs helped bring down prices as other automakers introduced lower-cost models. Canada has adopted the Electric Vehicle Affordability Program that offers federal rebates on qualifying electric cars. One of the qualifications is that the selling price be less that $50,000 Canadian. In addition, the car must be assembled in Canada or in a country that has a free trade agreement with Canada.

A Cautious First Step

Adam Thorn, transportation director at the Pembina Institute, a Canadian clean energy policy organization, sees Canada’s China EV opening as a “cautious first step” that is useful but not sufficient absent other considerations. To increase EV adoption, he says, Canada needs a “holistic ecosystem” approach, with purchase incentives, charging infrastructure, emissions rules, and domestic manufacturing policy working together.

One of the most important pieces, Thorn says, is Ottawa’s promised shift toward stronger vehicle greenhouse gas emissions standards for model years 2027 to 2032. The standards are meant to be technology neutral, allowing automakers to comply through more efficient gas vehicles, plug-in hybrids, or battery electrics. If regulations are designed correctly and the standards tighten, Thorn says, battery electric vehicles become the clearest path to compliance.

Charging companies, Thorn says, need enough EVs on the road to make public chargers profitable. Drivers need the confidence that charging infrastructure will be available before they buy an EV. It’s up to the government to make sure both pieces move together — otherwise, in effect, Canada risks asking consumers to make the switch before the system around them feels ready. Cheaper imports may help with price, rebates may help at the dealership, but if Canada wants EV adoption to grow, the policy pieces have to line up, he says.

Domestic Production

If Chinese automakers want to sell into Canada, the next question, Thorn claims, is whether Canada can require or encourage some of that production to happen domestically, which may be the most important consideration in the long run. Importing a limited number of Chinese-made EVs is one thing. Using that opening to build new manufacturing relationships is much harder.

For Thorn, the biggest misconception is that a small number of Chinese-made EVs are the central threat to Canadian auto jobs, a point that is backed by federal figures. In 2024, Canada produced about 1.3 million light-duty vehicles, and about 1.1 million of them were exported to the US. Tariffs, trade barriers, and uncertainty south of the border are already putting pressure on Canadian plants, shifts, and jobs. In that context, he argues, the China EV opening is less of a direct threat than a sign that Canada may need to diversify its auto strategy.

“The real threat to Canada’s automotive manufacturing is US policy,” Thorn says. For decades, Canada’s auto sector has been organized around a North American model dominated by the US. It has supported jobs but also left Canada exposed when US policy changed. The China EV opening raises a different possibility — that Canada may need to treat Chinese automakers not only as competitors but as companies reshaping the global industry.

Greig Mordue, an associate professor in the faculty of engineering at McMaster University, says China is no longer just catching up in the auto sector. “The Chinese automotive industry is without question the world’s leader,” he says. “There will be some that say, no, no, no, it’s in North America, but the reality is that ship sailed a while ago now.”

The risk, he says, is that Canada stays too tightly tethered to a US-centered auto strategy at a time when the global EV market is moving elsewhere. The opportunity is that the limited opening in the form of 49,000 EVs could give Canada a way to learn from Chinese EV production without abandoning its own manufacturing base.

Mordue does not see the 49,000 vehicle quota as a direct threat to Canadian production. Most vehicles built in Canada are exported, primarily to the US, so what Canadians buy at home is not the same as what determines Canadian factory output. A small number of imported Chinese EVs, he says, may displace some “made in Canada” sales, but not enough to remake the industry on its own.

Geopolitical Opportunity

Charlotte Yates, president of the Automotive Policy Research Center and a professor of political science at the University of Guelph, sees the opening as both a consumer move and a geopolitical one. Chinese EVs may give Canadians access to cheaper EVs, she says, but Canada still needs an auto industry that can build for the market the world is moving toward.

“I do not think there is a future automobile industry in Canada without building automotive EVs here,” Yates says. The next stage cannot be only about imports. Canada has to find ways to attract EV production, whether through existing automakers, a new automaker, or partnerships involving Canadian firms and foreign manufacturers.

Yates says any new Chinese-linked production in Canada would need clear guardrails — Canadian labor standards, unionized facilities, protections around technology transfer, and enough production volume to justify public investment. That is why assembly matters. The Canadian Vehicle Manufacturers’ Association says each job in a vehicle assembly plant can support roughly seven to nine additional jobs in the wider economy. That includes parts suppliers and logistics companies, tooling, maintenance, and professional services. Federal data shows the auto industry directly employed more than 125,000 people and indirectly supported about 427,000 more in 2024.

The success of Carney’s much-touted deal will eventually come down to these nuts and bolts — whether Canada can put an industrial policy in place to make EVs feel practical, affordable, and supported in everyday life,” The Walrus says. That’s a big ask, but it could move Canadian manufacturing out of the shadow of its neighbor to the south and allow it to build successful trade relations with other nations around the globe. The biggest losers could be US automakers who for decades have treated Canada’s auto industry as a vassal state, slavishly tied to the whims of corporate and political leaders in the US.

No doubt this is a monumental challenge for Canada, but it is one that could forever move it out of the shadow of Uncle Sam — something many Canadians would undoubtedly applaud.