Tesla is poised to be an early winner as Canada opens the door to Chinese-made EVs

BEIJING/SHANGHAI, Jan 19 (Reuters) – Tesla is poised to become the first automaker to benefit from Canada’s move to eliminate 100 percent tariffs on Chinese-made EVs, according to initial efforts to ship cars from its Shanghai plant and Canadian sales network experts.

Under the deal announced last Friday, Canada will be allowed to import 49,000 vehicles annually from China under most-favoured-nation terms with a tariff of 6.1%. Canadian Prime Minister Mark Carney has said that the quota can be increased to 70,000 vehicles within five years.

However, under a clause in the agreement, half of the quota will be reserved for vehicles priced below CAD 35,000 ($25,189). Prices for Tesla models are well above that number.

While many Chinese automakers are eager to seize the opportunity as exports expand, Tesla has already equipped its Shanghai plant, the largest and most cost-efficient factory globally, to build and export a Canada-spec version of its Model Y in 2023.

The American automaker began shipping cars to Canada from Shanghai that same year, boosting Canadian automobile imports from China to its largest port, Vancouver, by 460% year-over-year to 44,356 in 2023.

But it was forced to close in 2024 and switched to shipping from its U.S. and Berlin factories after Ottawa imposed 100% tariffs, which it wants to counter China’s deliberate state-directed policy of overcapacity.

Now, it ships the Berlin-produced Model Ys to Canada, but many variants, such as the cheaper Model 3s, are made in China.

“This new agreement could allow those exports to resume sooner,” said Sam Fiorani, vice president of research firm AutoForecast Solutions.

Tesla has an existing network of 39 stores in Canada, while Chinese rivals such as BYD and Neo do not yet have a sales presence there, and it can move quickly with marketing plans because it has only four core models, far fewer than its Chinese competitors.

“Tesla has a real advantage with offering few models, versions and simple product lines so it can be flexible to sell cars produced in any country to achieve the best cost efficiency,” said Yale Zhang, managing director of Shanghai-based consultancy Autoforesight.

Tesla did not immediately respond to Reuters’ request for comment.

Other brands that exported Chinese-made cars to Canada before the tariffs were Volvo and Polestar, which are both owned by China’s automaker Geely.