Canada can drive down EV prices for buyers

For years, Canadians have been told that the electric vehicle revolution was just around the corner. The cars were getting better, charging infrastructure was expanding and the climate case was airtight. The only thing missing was a price that ordinary people could afford.

That barrier may soon come down.

Canada has slashed tariffs on Chinese EVs following Canadian Prime Minister Mark Carney's visit to Beijing, cutting them from the 100 percent surtax imposed in 2024 to 6.1 percent for an annual quota of 49,000 vehicles.

Chinese automakers wasted little time in responding. BYD, the world's largest EV manufacturer by sales volume, announced plans to open 20 dealerships across Canada within a year, starting in the Greater Toronto Area. Geely is assembling a Canadian leadership team, advertising senior roles in sales, marketing, legal and aftersales from a Toronto base. Other Chinese manufacturers, including Nio and Xpeng, may be coming too. At the same time, China has introduced an export licensing system this year for passenger EVs, creating a framework for expansion overseas.

For the first time, Canadian consumers will have real choices in the EV market, alongside healthy, market-driven price competition.

The timing is both significant and urgent. In late February, the military conflict in the Middle East effectively closed the Strait of Hormuz, the narrow waterway through which nearly 20 percent of the world's oil supply had been flowing. The impact on energy markets was immediate and severe. Brent crude, which began the year at roughly $61 a barrel, surged to above $120 a barrel in April, a level not seen since the Russia-Ukraine conflict broke out in 2022.

Canadians have felt that in every trip to the gas station. In Vancouver, which has the highest fuel prices in the country, it has now become common to see gasoline prices of C $2.20 ($1.58) per liter, the highest they have ever been and almost 40 percent higher than a few months ago.

Against this backdrop, the economics of driving an internal combustion engine have rarely looked worse while the case for switching to an EV has rarely looked better — provided you can actually afford one.

That has long been a barrier to owning an EV in Canada.

There are plenty of EVs on the streets across the country, but those vehicles are usually premium models in the high-priced segments. A market dominated by Tesla and a handful of established European and North American brands has faced limited pressure to compete on price. Consumers who wanted an electric vehicle but couldn't stretch to the average C $55,000 price of an EV were left with few options.

Chinese manufacturers bring a fundamentally different approach to the market. Take BYD's Seagull, which sells for the equivalent of roughly C $15,500 in China. It represents a category of affordable EVs that simply does not exist in Canada today. Even accounting for tariffs, shipping and local certification costs, Chinese EVs are expected to land in Canada at price points that will force established automakers to respond.

There are already indications that Canadians are responding to the changing market conditions.

Zero-emission vehicle (ZEV) sales jumped 74.7 percent in March compared with a year earlier as fuel prices started climbing. ZEVs accounted for 12.2 percent of all new vehicle sales that month, nearly double the 6.5 percent share recorded a year earlier.

That surge happened before a single Chinese showroom opened in Canada. When BYD's first Greater Toronto Area dealerships open later this year, the market will face its first real test of what genuine competition can do to an industry that has long been insulated from it.

The international context makes the Canadian opportunity even clearer. European Union EV sales rose 51 percent in March as competition and model diversity allowed buyers to easily shift away from traditional cars when oil prices spiked. In the United States, by contrast, EV sales fell yet again in March and have been falling for months as the federal government rolled back incentives and embraced an openly skeptical posture toward electrification.

Canada finds itself between those two trajectories, with an opportunity to choose which path to follow.

Some in Canada have voiced concerns over national security and the protection of domestic manufacturing. But the decision to grant an annual quota of 49,000 Chinese EVs at the most-favored-nation tariff rate — while China has adjusted countervailing measures — reflects bilateral efforts that will ultimately benefit Canadian consumers. In a year when the country lost more than 110,000 jobs in the first four months and consumer confidence has been sliding, the case for shielding a premium car market from competition has become untenable.

Fair and open competition can deliver tangible benefits to ordinary consumers. Chinese EVs will offer Canadian consumers more choices and lower prices, and may even play a role in shoring up the country's automotive industry.

This is not just about geopolitics or trade policy, though it involves both. It is about whether Canadians will be able to buy affordable, efficient vehicles at a time when the cost of the alternative continues to rise. The showrooms are not open yet, and the cars have not yet arrived on dealer lots. But the window that has been opened by this trade deal is real, and it should not be allowed to close.

The author is the managing director of Bahati Ltd, a trade and economics analysis firm based in Canada.

The views don't necessarily represent those of China Daily.

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