Regulations in Canada

Canada has more regulatory hurdles. Its safety standards are similar to those of the U.S., which are quite different in scope than the standards in Europe and Asia. Due in part to the fact that Chinese EVs are unlikely to be sold in the U.S. anytime soon due to a 100 percent tariff barrier imposed by the American government, Chinese automakers will face high homologation costs to sell what amounts to a small number of vehicles in Canada. At least in the short term, that is. They might deem it a prudent and strategic investment in the long-term if they see it as inevitable that they will break into the U.S. market eventually.

The quota system restricts electrified vehicles but does not address imports of combustion-powered models. Chinese automakers who produce vehicles with multiple powertrains might want to use the quota to bring in EVs, make a name for themselves, and then add other models to the mix to make it more of a viable proposition for automakers as well as dealers, Brinley said.

Like in the U.S., EV sales in Canada were hurt when Canada suspended its federal incentives to buy electric. EVs produced by General Motors were the top sellers in 2025, followed by Tesla, and overall, EVs accounted for 6.2 percent of new vehicles registered in Canada last year. The federal government brought back federal rebates for EVs in February, but Chinese vehicles will not qualify for the incentive.

First Come, First Served

The 49,000-vehicle quota will be shared by all interested parties: Chinese brands as well as more established automakers who build cars in China. That potentially includes Tesla Model 3s produced by the automaker’s Shanghai plant, Chinese-built Volvos and Polestars, perhaps even the Chinese-made hybrid version of the Lincoln Nautilus.

Everything’s being done on a first come, first served basis, there’s a finite timeline that expires, and brands need a distribution network, Brinley said.

Of China’s domestic brands, BYD has made the most progress in its bid to start selling vehicles in Canada. It has hired an Ontario-based retail consultant to help with plans to open some 20 sales locations, starting in Toronto, according to the Globe & Mail. Subsequent stores would then potentially open in Montreal, Calgary, and Vancouver. BYD has also registered its production facilities with Transport Canada, a prerequisite for importing vehicles into Canada. BYD hasn’t said what models it would sell in Canada, but the Dolphin hatchback or Atto 3 compact SUV are reasonable options.

BYD is the world’s largest EV manufacturer, and it continues to grow. Its innovations are world-leading, such as its Flash charging that can reportedly take a battery pack for its new premium Denza brand models from 10 percent to 70 percent in just five minutes and to 97 percent in nine minutes with its own fast chargers. No other competitor comes close.

Geely, the Chinese company that owns Volvo, Polestar, Lotus, and others, already sells vehicles in Canada through each brand’s retail network, but at present, the made-in-China models are subject to high tariffs. Geely could also expand its offerings from its other, Chinese-centric brands such as Zeekr or Lynk & Co. Chery Automobile is also reportedly looking at setting up dealerships in Canada.

Not Everyone in Canada Likes the Deal, but Some Do

In Canada, the trade agreement is proving controversial. It’s a federal deal that Canada’s Liberal Party prime minister supports, but the federal Conservative leader doesn’t, nor does it have the support of all provinces. Ontario Premier Doug Ford, for one, has condemned it, going so far as to call Chinese vehicles “spy cars.” Automakers and suppliers have also voiced concern, even though the deal is designed to spur Chinese investment in the Canadian auto industry. So far, however, no deals have been announced for any parts supplier or manufacturing facility.

As for auto dealers, many seem to be open to the deal. BYD and Geely are said to be in talks with Canadian dealers around making plans for sales and distribution efforts.

Generally speaking, Canadian consumers like the idea of expanded choice, especially when it comes to more affordable vehicles, and Chinese models tend to offer more content for less money. Sixty-one percent of Canadians surveyed by pollster Leger between January 30 and February 2 were in favor of Chinese EVs in the Canadian market.

When asked whether they had any concerns, 38 percent of respondents cited vehicle quality and impacts on the Canadian auto industry, while only 33 of respondents cited privacy and security concerns.

Then there’s the matter of vehicle crash safety. Traditionally, Chinese vehicles have been seen as less safe in crash testing, with weak structural integrity and poor airbag performance, largely because they only needed to meet the lower safety standards for their domestic models. But that’s changed for the main players. Some Chinese cars now dominate in global safety rankings and earn top ratings. With so many automakers in China, there is inconsistency on the safety front. It’s the larger players with strong scores who are expected to reach North American shores first, Brinley said.

Security Risks and Trump Retaliation

There are concerns about national security raised by Ontario’s Premier Ford and others as well as fear of retaliation from the U.S., which is actively working to keep Chinese imports out of the American market. Relations are crucial as the U.S., Canada, and Mexico have a July deadline to review the USMCA trade agreement between them, which is seen as a key pact for the auto industry.

The move isn’t without risk. The Trump administration has threatened retaliation if Canada becomes a back door for Chinese vehicles to enter the U.S. President Donald Trump has threatened to put 100 percent tariffs on all Canadian goods as a potential retaliatory measure. But the president has also said he is open to Chinese automakers building plants in the U.S.