Whereas Ontario Premier Doug Ford sharply opposed the federal authorities’s plan to permit 49,000 Chinese language EVs into Canada at a low tariff price — calling it lopsided and warning it will threaten Canada’s home business — Prime Minister Mark Carney was fast to counter.
“We don’t wish to be aggressive available in the market of 2000, 2010,” the prime minister mentioned. “We wish to turn out to be aggressive available in the market sooner or later.”
Final week, the federal authorities moreover introduced it can give preferential entry to Canada’s home market to overseas automakers that construct automobiles right here, rewarding them with decrease tariffs. The small print of this coverage haven’t been launched but, nevertheless it’s clearly impressed by Canada’s success attracting Japanese producers within the Nineteen Eighties.
Collectively, these two bulletins recommend {that a} step-change in Canada’s automotive industrial technique is coming. By each permitting in a small quota of Chinese language EVs and promising preferential market entry to home producers, Canada might obtain competitiveness by incentivizing Chinese language, Korean, and German corporations to construct right here — in order that we are able to study from the most effective.
To grasp this chance, it helps to zoom out and produce into focus each the long run competitiveness of Canada’s auto sector and the broader provide chain behind it.
Whereas Canada sat within the embarrassing place of being possibly the one nation on the earth with declining EV gross sales in 2025, based on an evaluation of fifty main automotive markets, EVs had one other record-breaking yr globally: up 20 per cent, together with 33 per cent in Europe and 48 per cent exterior of Western nations and China. EVs made up one in 4 automobiles offered worldwide final yr.
China is contributing to this development by promoting automobiles at residence and making reasonably priced, high-quality EVs accessible all through the world. The Worldwide Vitality Company predicts EVs will exceed 40 per cent of world gross sales in 2030, with China poised to see a gross sales share of round 80 per cent by this time. In the meantime, fuel automobile gross sales peaked in 2017.
Whereas no Chinese language funding in Canada was introduced , each side agreed to discover EV provide chain partnerships, with Carney focusing on Chinese language funding in Canada’s auto sector inside three years. China is now setting the worldwide commonplace on EV expertise. A three way partnership between Canada and a Chinese language accomplice might, if completed proper, assist carry the latter’s expertise and know-how to our manufacturing base. Studying from China would focus Canadian industrial technique on real technological functionality.
Selective publicity to world leaders may also carry self-discipline to home producers. Whereas unrestricted publicity dangers wiping out home business as Premier Ford warned, managed competitors from low-cost, high-quality importers forces them to step up their recreation and study. This drives innovation and productiveness features — whereas main to raised automobiles for customers.
A dedication to the EV transition — if not by way of the Detroit Massive Three, then by working with international leaders — additionally expands Canada’s financial alternative past auto meeting and auto elements to incorporate sectors within the higher and center segments of the battery worth chain, from crucial minerals to battery supplies and elements. A give attention to crucial minerals additionally diversifies Canada’s export alternatives as we work to scale back reliance on the U.S. Solely 41 per cent of Canada’s crucial mineral exports went to the U.S. as of 2021, and Canada has since struck quite a few strategic partnerships on crucial minerals with non-U. S. buying and selling companions.
If Canada goes to have an auto sector sooner or later — not to mention a aggressive one — it wants to provide high-quality, reasonably priced EVs and the elements and supplies that go into them. Ottawa is set to launch a brand new auto technique this February, which is predicted to centre home EV manufacturing and supply extra beneficial Canadian market entry to overseas corporations that make automobiles in Canada. It’s the best transfer.
On the similar time, tomorrow’s Canadian-located producers can even want a assured, rising market to scale into. Instruments like Canada’s Electrical Automobile Availability Normal may very well be a part of this broader technique, rewarding producers which can be manufacturing in Canada or bringing significantly reasonably priced fashions to {the marketplace}. So might renewing client EV incentives, boosting authorities procurement, and constructing extra charging infrastructure. We now have a generational alternative to study from the most effective, reinvent our auto sector, and construct up a sovereign provide chain that decreases our dependence on one nation.
The automotive market of the long run is an effective one for Canada.
This submit was co-authored by Bentley Allan and first appeared within the Toronto Star.
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