While Ontario Premier Doug Ford sharply opposed the federal government’s plan to allow 49,000 Chinese EVs into Canada at a low tariff rate — calling it lopsided and warning it would threaten Canada’s domestic industry — Prime Minister Mark Carney was quick to counter.
“We don’t want to be competitive in the market of 2000, 2010,” the prime minister said. “We want to become competitive in the market in the future.”
Last week, the federal government additionally announced it will give preferential access to Canada’s domestic market to foreign automakers that build vehicles here, rewarding them with lower tariffs. The details of this policy have not been released yet, but it’s clearly inspired by Canada’s success attracting Japanese manufacturers in the 1980s.
Together, these two announcements suggest that a step-change in Canada’s automotive industrial strategy is coming. By both allowing in a small quota of Chinese EVs and promising preferential market access to domestic producers, Canada could achieve competitiveness by incentivizing Chinese, Korean, and German firms to build here — so that we can learn from the best.
To understand this opportunity, it helps to zoom out and bring into focus both the future competitiveness of Canada’s auto sector and the broader supply chain behind it.
While Canada sat in the embarrassing position of being maybe the only country in the world with declining EV sales in 2025, according to an analysis of 50 major car markets, EVs had another record-breaking year globally: up 20 per cent, including 33 per cent in Europe and 48 per cent outside of Western countries and China. EVs made up one in four vehicles sold worldwide last year.
China is contributing to this trend by selling cars at home and making affordable, high-quality EVs available throughout the world. The International Energy Agency predicts EVs will exceed 40 per cent of global sales in 2030, with China poised to see a sales share of around 80 per cent by this time. Meanwhile, gas vehicle sales peaked in 2017.
While no Chinese investment in Canada was announced , both sides agreed to explore EV supply chain partnerships, with Carney targeting Chinese investment in Canada’s auto sector within three years. China is now setting the global standard on EV technology. A joint venture between Canada and a Chinese partner could, if done right, help bring the latter’s technology and know-how to our manufacturing base. Learning from China would focus Canadian industrial strategy on genuine technological capability.
Selective exposure to world leaders can also bring discipline to domestic manufacturers. While unrestricted exposure risks wiping out domestic industry as Premier Ford warned, controlled competition from low-cost, high-quality importers forces them to step up their game and learn. This drives innovation and productivity gains — while leading to better cars for consumers.
A commitment to the EV transition — if not via the Detroit Big Three, then by working with global leaders — also expands Canada’s economic opportunity beyond auto assembly and auto parts to include sectors in the upper and middle segments of the battery value chain, from critical minerals to battery materials and components. A focus on critical minerals also diversifies Canada’s export opportunities as we work to reduce reliance on the U.S. Only 41 per cent of Canada’s critical mineral exports went to the U.S. as of 2021, and Canada has since struck numerous strategic partnerships on critical minerals with non-U. S. trading partners.
If Canada is going to have an auto sector in the future — let alone a competitive one — it needs to produce high-quality, affordable EVs and the parts and materials that go into them. Ottawa is set to release a new auto strategy this February, which is expected to centre domestic EV production and offer more favourable Canadian market access to foreign companies that make cars in Canada. It’s the right move.
At the same time, tomorrow’s Canadian-located manufacturers will also need a guaranteed, growing market to scale into. Tools like Canada’s Electric Vehicle Availability Standard could be part of this broader strategy, rewarding producers that are manufacturing in Canada or bringing particularly affordable models to the marketplace. So could renewing consumer EV incentives, boosting government procurement, and building more charging infrastructure. We have a generational opportunity to learn from the best, reinvent our auto sector, and build up a sovereign supply chain that decreases our dependence on one country.
The car market of the future is a good one for Canada.
This post was co-authored by Bentley Allan and first appeared in the Toronto Star.
