Tesla Inc (NASDAQ:TSLA) and several automakers controlled by Zhejiang Geely Holding Group are expected to be among the first beneficiaries of Canada’s decision to cut import tariffs on electric vehicles made in China.
Under a trade agreement announced on Friday, Canada will allow up to 49,000 Chinese-made EVs to enter the country annually at a tariff rate of 6.1%, replacing a 100% duty imposed in 2024.
The quota could increase to 70,000 vehicles within five years. The deal also includes concessions by China on Canadian canola exports.
While the policy is aimed at encouraging longer-term investment from Chinese automakers, it is expected that the initial impact will favour manufacturers with existing North American certification and sales networks.
Bloomberg Intelligence analysts pointed to Tesla, as well as Geely-controlled brands Volvo and Polestar, which have established Canadian operations, as early winners.
Other Chinese automakers are expected to pursue entry into Canada under the new framework, but may face longer timelines to meet regulatory requirements.
Tesla was a major importer of Chinese-built vehicles before the higher tariff took effect, shipping more than 44,000 EVs to Canada in 2023 from its Shanghai factory. Those imports stopped in 2024 after Ottawa raised tariffs, citing concerns over excess capacity in China’s auto sector.
The revised tariff regime could allow Tesla to resume sourcing vehicles from Shanghai, its largest and most cost-efficient plant, which was previously equipped to produce Canada-specific versions of the Model Y. Tesla currently supplies Canada mainly from its US and Berlin factories, while several lower-priced Model 3 variants are built in China.
The agreement includes a provision reserving half of the annual import quota for vehicles priced under C$35,000. Tesla’s models exceed that threshold, though media outlets speculate the company can still benefit from the remaining allocation, particularly in the early stages.