China’s largest electric vehicle makers have yet to reveal their plans for Canada after a new trade agreement signed last week opened a potential path into the North American market, even as several have been expanding their presence in South and Central America.
Canadian Prime Minister Mark Carney announced during a state visit to Beijing that Canada will allow up to 49,000 Chinese-made electric vehicles into the country annually at a most-favored-nation tariff rate of 6.1%.
The quota will rise to 70,000 units by the fifth year, with more than half required to be priced below C$35,000 ($25,300) by 2030.
The deal could provide Chinese automakers a foothold in North America at a time when direct entry into the American market is effectively blocked.
The Biden Administration has quadrupled the tariffs on Chinese EVs in 2024 to 100% and introduced rules banning Chinese-made software and hardware in connected vehicles, citing national security concerns over data collection and potential remote access to vehicle systems.
Who Benefits First
Automakers already certified in North America are best positioned to capitalize on the agreement, including Tesla and Geely Automobile Holdings’ controlled Volvo, Lotus and Polestar.
Lotus said the day after the tariff deal was announced that it would cut the price of its Eletre SUV by about 50%.
However, the Chinese giant said the impact of the new deal differs by brand.
Tesla exported over 44,000 vehicles from its Shanghai Gigafactory to Canada in 2023.
However, the company was forced to halt Chinese shipments in 2024 after Ottawa imposed 100% tariffs, citing a wish to counter what it called China’s state-directed policy of overcapacity.
The company switched to shipping from its US and Berlin factories.
However, the tariffs took a toll in 2025.
Tesla delivered between 18,300 and 20,000 vehicles in Canada for the full year 2025, down from roughly 55,000 units in 2024, according to registration data cited by DrivenTeslaCanada, which compiled figures from multiple industry sources.
The figures indicate a 63–67% year-over-year decline.
Data from ‘DesRosiers Automotive Consultants’ confirm that Tesla‘s Canadian sales fell by more than 60% but noted a partial recovery later in the year.
Tesla currently ships Model Y vehicles produced in Berlin to Canada, but other variants such as the cheaper Model 3 are mostly built in China.
The new trade deal would allow the company to resume shipments from its Shanghai Gigafactory — its most efficient plant — at the reduced 6.1% tariff rate.
Tesla operates nearly 40 stores and service centers across Canada while Geely’s Lotus brand operates six dealerships in the country.
BYD
BYD, the world’s largest EV maker that surpassed Tesla for the first time in 2025, is the new energy vehicle (NEV) market leader in Argentina, Brazil, Colombia, Ecuador, and Uruguay.
The company declined to discuss its intentions for the Canadian market at this stage.
“We sincerely apologize, but we are unable to share specific details on this matter at this time,” the company said on Thursday in response to questions from EV.
BYD has been operating in Canada since 2013. It opened its first factory in Ontario in 2019 to assemble commercial vehicles.
The Shenzhen-headquartered company was reported to be exploring entry into the Canadian passenger vehicle market in July 2024.
The tariff reduction will help BYD refine its global sales network, particularly its North American footprint, and drive sales growth, Shenzhen TV reported on Saturday, as first reported by CnEVPost.
The local broadcast added that the agreement will further boost BYD‘s localization efforts in the country without detailing any concrete plans.
BYD does not sell passenger vehicles in the United States, where Executive Vice President Stella Li has said previously the market is “too restrictive.”
The company has instead focused its Americas strategy on Latin America, where Brazil has become a cornerstone of its global expansion.
BYD sold 76,700 vehicles in Brazil in 2024, a 328% surge from the prior year with 2025 figures jumping another 47%.
Last July, the company rolled off the first Dolphin Mini manufactured at its new plant in Camaçari.
BYD is investing R$5.5 billion ($1.03 billion) in the Brazilian complex, which began operations with annual capacity of 150,000 vehicles and scale to 300,000 in a second phase.
“We expect dealers from the Americas to bring more of BYD‘s new technologies and products globally,” Li said at an event with Americas dealers held nearly a year ago in China.
XPeng
The Guangzhou-headquartered carmaker XPeng is present across 60 markets worldwide and surpassed this week 1,000 stores with 380 of them being outside China.
XPeng, which exported more than 40,000 vehicles in 2025, declined to comment on its plans for Canada expansion at this stage.
The brand is targeting sales of 550,000 to 600,000 vehicles this year, Chinese tech outlet 36Kr reported earlier this month.
Founded and led by He Xiaopeng, XPeng will be launching several new models in China and across its international markets this year as it focuses on extended range electric vehicles (EREVs).
Li Auto
A Li Auto spokesperson told EV on Thursday that the company is focused on other regions and made no mention of Canada or the Americas in its expansion plans.
Unlike rivals Nio and XPeng, which quickly set up overseas footprints in Europe, the Beijing-headquartered company opted to focus on its domestic market before expanding internationally.
“2025 marks Li Auto‘s inaugural year for international expansion,” the company said in response to questions from EV.
“The company has officially entered four markets — Uzbekistan, Egypt, Kazakhstan, and Azerbaijan — selling the L6, L7, and L9 models through more than 10 retail and service locations overseas.”
The automaker, known for its extended-range electric SUVs, added that it plans to deepen its presence in Central Asia in 2026 while expanding into the Middle East and Europe.
GAC
The Guangzhou-based automaker has been pursuing a new wave of global expansion after scrapping earlier plans to enter the US market.
In January 2019, the State-owned automaker said it intended to launch in the United States in 2020.
“Our ultimate objective is to build the company into a world-class brand and globalized brand,” GAC president Yu Jun said at the time. “We think American consumers will enjoy our products.”
Those plans were ultimately abandoned and GAC has since focused on other regions.
Last November, the company said it would build its electric Aion V model at a Magna International facility in Graz, Austria — a strategy that helps GAC avoid EU tariffs of up to 37.6% on China-made EVs.
In the Americas, GAC announced in May it would launch in Brazil, saying it expects its lineup of hybrid and electric vehicles to gain market acceptance that would allow it to begin factory construction in the country by late 2026.
GAC Group did not respond to EV‘s request for comment on the Canada-China tariff deal as of publication time.
Nio
The Shanghai-based company has taken a cautious approach to North America.
As exclusively reported by EV in June, Nio suspended its plans to expand into the US market — an ambition it first announced in 2021 as part of a goal to offer services in over 25 countries and regions by 2025.
The company has significantly scaled back its teams in Europe and the United States in 2025.
A year ago, the Chinese outlet LatePost reported that Nio had eliminated San Jose-based roles in its smart driving and engineering units.
A week before the Canada-China deal was announced, Nio Group launched its Firefly compact car brand in Singapore.
Asked about the US market, Chris Chen, Nio‘s vice president and head of global business, said the market remains out of reach for Chinese EV makers without local manufacturing.
“The US market is a tough market. You have to have a local assembly to make sure that you can sell cars in the US market,” Chen said. “We are looking at the geopolitical reasons. And also all of the taxation systems. Then we decide which market to go.”
Nio did not respond to EV’s request for comment on the Canada-China deal as of publication time.
Political Backlash
The Canadian agreement has drawn sharp criticism from politicians and labor groups.
Ontario Premier Doug Ford called the incoming vehicles “spy vehicles” and said the deal was “not thought of properly.”
Unifor, Canada’s largest private-sector union, said the agreement “puts Canadian auto jobs at risk” and weakens the country’s negotiating position with the United States on existing tariffs.
“Finding a resolution to US auto tariffs just got more difficult as Canada has surrendered the leverage of opening our market to China,” Unifor National President Lana Payne said.
US President Donald Trump endorsed the deal last week despite the Transportation chief and US Trade Representative criticizing the new tariffs.
