- The Government of Canada will introduce a 100% tax this October, on EVs manufactured within China.
- Taxes will impact all manufacturers producing EVs within China, including manufacturers foreign to China itself.
- This puts tariffs in line with its neighbour, the US, who introduced a similar heavy tax on Chinese electric vehicles back in May, while the European Union also imposed tariffs, but with lower duties of up to 38.1%.
Canada follows the US in EV policy
The new 100% tax on imported EVs from China is on par with the US, and effectively doubles the price of any Chinese-made EV – and largely removing any financial case for importing Chinese-manufactured EVs to the country. Tariff hikes have also been introduced in the EU, but in a more nuanced fashion – with the Chinese manufacturers BYD, Geely, and SAIC facing tariffs of 17.4%, 20%, and 38.1% respectively.
Whilst Chinese EV manufacturers such as BYD or MG were yet to launch within Canada, recent files discovered by Reuters showed that the former was recently drawing up plans to enter the Canadian market. However, this new tax will bring questions to this plan. Opening facilities within regions such as North America, or Europe, without trade barriers, would help such manufacturers to continue or begin selling cars within the country, even after the tariffs are imposed.
The move from Canada will also create challenges for foreign EV manufacturers with facilities within China, such as Tesla. When the US imposed its similar 100% tariff earlier this year, Tesla responded by switching many of its China-made vehicles, originally destined for the US, to Canada. However, that still gives manufacturers just over a month until the tax is made effective on October 1st, so expect manufacturers such as Tesla and Volvo to import as many EVs made within China as they can, ahead of the heavily-taxing deadline.
