According to CCTV News, Canadian Prime Minister Mark Carney announced a new electric vehicle strategy on February 5, including the reinstatement of purchase subsidies, and stated that Canada will cooperate with China to promote domestic production and export of electric vehicles in Canada.

       According to a statement released by the Prime Minister's Office, Canada will fully utilize existing and new trade agreements, including the recent electric vehicle cooperation agreement reached with China, to promote large-scale investment in this sector, diversify Canada's automotive export markets, and establish Canada as one of the global leaders in the electric vehicle field.

       Liu Jiangyun, a part-time researcher at the Canadian Studies Center of Guangdong University of Foreign Studies, stated that Carney's new policy for the automotive industry is to some extent modeled after Canada's "Transplant" strategy of the 1980s, which attracted Japanese automakers at the time to establish production bases in Canada through a combination of tariff reductions and export restrictions, rather than simply exporting complete vehicles to Canada. The biggest difference this time is that in the past, Canada's "confidence" was backed by the U.S. market, whereas today it needs to rely on leveraging the attractiveness of its own market.

   Have Chinese Enterprises Already Begun Layout?   

       During his visit to China last month, Carney announced that Canada would grant China an annual quota of 49,000 electric vehicles, enjoying Most-Favored-Nation tariff treatment of 6.1% within the quota, with the quota increasing year by year at a certain proportion. During this period, Canadian Industry Minister Jolie also met in Beijing with executives from BYD, Chery, and Canadian auto parts supplier Magna, which has large-scale operations in China, and encouraged these companies to invest and build factories in Canada in the future.

       Some automakers have already begun to take action. According to reports, multiple Canadian automotive industry professionals stated they were recently contacted on the professional social platform LinkedIn by recruiters claiming to represent Chery. Chery Automobile is recruiting product and market positions targeting Canada on the recruitment platform Liepin, with work locations in Toronto, Canada and Wuhu, Anhui respectively, with the positions most recently updated on February 3.

       Before Canada increased tariffs, the electric vehicle companies producing in China and exporting products to Canada were mainly Tesla and Polestar. BYD passenger vehicles manufactured in Shenzhen and Xi'an also appeared in Appendix G of the pre-approved plan of Transport Canada. According to Transport Canada, Appendix G allows automakers to import fewer than 2,500 new foreign-manufactured vehicles that already comply with Canadian Motor Vehicle Safety Standards (CMVSS), but this program has been suspended since July last year for one year. The specific application time for BYD is currently unknown.

       Industry insiders stated that compared to other Chinese automakers, BYD, which has already obtained approval, could theoretically begin importing vehicles immediately after tariffs are reduced. However, the company still needs to establish dealer networks, build service and warranty infrastructure, and other work. As of press time, Chery and BYD have not responded to the above matters.

   Carney Restarts Electric Vehicle Purchase Subsidies   

       According to the statement released by the Prime Minister's Office, Carney abandoned the electrification targets set by former Prime Minister Trudeau, aiming to achieve 90% of new vehicles being electric by 2040. The previous target required 100% electric vehicles by 2035.

       Carney also restarted a five-year federal purchase subsidy program, with individuals and businesses eligible for up to $5,000 for purchasing or leasing battery electric and fuel cell electric vehicles, and up to $2,500 for plug-in hybrid electric vehicles (PHEVs). However, subsidies only apply to vehicles priced below CAD 50,000 and imported from countries with which Canada has signed free trade agreements. This also means that Chinese electric vehicles allowed into the Canadian market will not qualify for subsidies.

       In terms of infrastructure, the Canadian federal government announced an investment of CAD 1.5 billion in the Charging and Hydrogen Refueling Infrastructure Initiative of the Canada Infrastructure Bank. Carney also stated that an electricity strategy will be announced in the future to double grid capacity. It is worth noting that the Carney government announced the maintenance of retaliatory tariffs on U.S. automotive imports and strengthened tax relief for companies producing vehicles in Canada.

       Trump announced last year a 25% tariff on Canadian imported vehicles and their parts that do not comply with the USMCA, with the USMCA set to be reviewed this year. Carney responded to this by stating: "If the United States insists on implementing some form of automotive tariffs during the agreement review process, we will ensure that companies selling cars in Canada receive strong incentives, thereby encouraging them to produce vehicles in Canada."

       Liu Jiangyun stated that Carney's maintenance of retaliatory tariffs against the U.S. is to retain one of the few bargaining chips currently available, in order to have "room to maneuver" in the next round of negotiations. He explained that from Carney's speeches during his visit to China and at the Davos Forum, it can be seen that Canada is handling Canada-U.S. relations according to a "prepare for the worst" script. "Under this background, it is actually difficult to say who is the winner between Canada and the U.S. Under the circumstances where Trump is wantonly destroying trade rules, what Carney is doing is simply accelerating the promotion of trade diversification to reduce dependence on the United States, thereby minimizing Canada's losses as much as possible."

       Affected by multiple factors such as the cancellation or reduction of electric vehicle purchase subsidies, limited electric vehicle choices, and infrastructure construction such as charging stations not meeting expectations, Canadian electric vehicle sales have shown a downward trend. Statistics Canada data shows that in the third quarter of 2025, Canada registered just over 45,000 new zero-emission vehicles (i.e., pure electric vehicles and plug-in hybrid vehicles), a 40% decrease from the same period last year.

       Flavio Volpe, President of the Automotive Parts Manufacturers' Association, told the media that he is very satisfied with this deal. "It addresses both the demand side and the supply side, allowing us to continue effectively reducing carbon emissions while allowing all manufacturers to autonomously choose their technology paths." Unifor, the union representing Canadian auto workers, has also mostly expressed positive views on the new measures.

   Different Attraction Strategies for China and South Korea   

       Currently, Canada is intensifying efforts to promote diversification of its electric vehicle manufacturing industry. In addition to the aforementioned electric vehicle cooperation agreement with China, Canada also signed a memorandum of understanding with South Korea last week, which includes expanding South Korea's automotive industry base in Canada and enhancing development opportunities for Canadian electric vehicle manufacturing.

       Liu Jiangyun analyzed that although Carney's new policy mentions both South Korea and China, the strategies for the two countries are different. Carney's strategy for South Korea is "military procurement in exchange for investment," with the Canadian government explicitly requiring the South Korean government to coordinate Hyundai Group to set up factories in Canada in exchange for Canada's procurement of South Korean conventional submarines. For China, Carney's strategy is "market in exchange for technology," mainly promoting the construction of production lines in Canada through joint ventures.

       He stated that for Chinese automakers, building production lines in Canada means gaining access to the world's eighth-largest new vehicle sales market. However, at the same time, companies must also fully consider risks existing at strategic and tactical levels. He further explained that at the macro level, since more than 85% of Canadian automotive production is sold to the United States, U.S. tariff policy has decisive influence on Canada, and whether the Canadian side can persist in implementing existing policies remains to be tested. "At the tactical level, first, Canada has a powerful automotive industry union, and China-Canada joint ventures may face friction in management styles; second, if joint venture-produced electric vehicles are restricted from using Chinese software solutions, then Chinese automakers' advantages in intelligent cockpits and assisted driving cannot be leveraged, and product competitiveness will be greatly reduced; third, the Canada-U.S. automotive parts industry chain is deeply integrated, and whether joint ventures can overcome political interference and stably obtain required parts remains to be seen," he analyzed.