The government explores joint ventures, tariff incentives, and global exports amid shifting trade strategy.
Canada Industry Minister Melanie Joly
On the Dash:
- Canada’s EV strategy could introduce new brands, supply chains, and service opportunities for North American dealers.
- Tariff credits tied to domestic production may influence OEM pricing, inventory, and cross-border vehicle flows.
- Increased global exports from Canada could alter long-term vehicle sourcing and distribution strategies.
Canada is pursuing investment from a Chinese automaker to build electric vehicles domestically for global export, signaling a strategic pivot to strengthen its auto sector and reduce reliance on U.S. production.
In an interview with Bloomberg News, Minister of Industry Melanie Joly said the federal government is holding “active conversations” with Chinese automakers about establishing EV assembly plants in Canada that would serve international markets. The approach would rely on joint ventures that pair Chinese vehicle platforms with Canadian labor, suppliers, and technology.
Canadian auto parts suppliers, including Magna International, Linamar, and Martinrea, already operate in China and could play a role in future joint ventures, Joly said. She added that Canada’s software sector could also be part of the strategy, pointing to Ottawa-based QNX, owned by BlackBerry, as a potential partner to address vehicle software and security concerns.
The outreach marks a notable shift for Canada, which has previously accused China of unfairly subsidizing its auto industry and raised concerns about the security of connected vehicle technology. Joly said those issues could be addressed through Canadian-based software controls, domestic labor standards, and locally developed supply chains.
The effort is part of Prime Minister Mark Carney’s broader trade reset with China. In January, China agreed to begin lifting tariffs on Canadian agricultural products in exchange for Canada exempting up to 49,000 Chinese-built EVs annually from a 100 percent tariff imposed in 2024.
Canada’s push to diversify auto investment comes as its domestic industry faces pressure from U.S. tariffs and recent pullbacks by automakers. For instance, General Motors has announced layoffs at Canadian facilities, and Stellantis has reversed plans to restart a plant near Toronto.
To counter those trends, the government recently unveiled a new auto strategy that includes maintaining retaliatory tariffs on U.S.-built vehicles while introducing an import credit system. Under the plan, automakers that build more vehicles in Canada would pay lower tariffs on U.S. imports and could sell excess credits to other companies. Honda and Toyota, which account for roughly three-quarters of Canadian auto production, would be among the biggest beneficiaries.
