Chinese-made electric vehicles are almost invisible in Canada and the United States, but elsewhere around the globe they are a huge hit, dominating international production and sales for battery-powered cars.
The lack of visibility for popular Chinese-made electric vehicle (EVs) brands in North America is largely because both Canada and the United States imposed a tariff of 100 per cent on their importation, doubling their cost for consumers.
The presence on Canada’s roads should be changing soon after Prime Minister Mark Carney’s trip to Beijing for meetings with China’s President Xi Jinping. Carney announced a “landmark trade arrangement” Friday: China is expected to reduce tariffs on Canadian canola in exchange for Canada allowing some Chinese-made EVs into the country at a preferential tariff rate.
It might make Canada the next metaphorical racetrack for Chinese-made EVs, which have been lapping competitors in global markets in recent years.
China has become the world’s EV manufacturing heavyweight and export powerhouse. It’s EVs are less expensive than most competing vehicles and are often touted as using better technology. The head design for China’s biggest EV maker BYD Auto is Wolfgang Egger, former head of design at Alfa Romeo, Audi and Lamborghini.
Of the approximately 90 million EVs made last year, China accounted for about 35 million, while the United States manufactured about 11 million and Canada less than two million.
The rise of China’s EVs started in 2008 when the world’s second most populous country made a strategic shift towards EVs for its domestic market.
China’s government infused massive state support to make it happen.
Chinese consumers were given generous subsidies and inducements to replace gas cars with EVs, sparking huge domestic demand. That gave Chinese manufacturers a head start, working out technological, design, and manufacturing kinks, scaling up production, and leveraging volume to reduce prices.
Through growing pains, its EVs gained significant traction in the last five years.
There were an estimated 11 million
in China in 2024, where an estimated one in 10 cars currently on the road is electric.
China-made brands such as BYD, Nio, Aito, and Wuling HongGuang became hits as the price gap narrowed between battery-powered cars and conventional gas-powered cars.
In China, according to the International Energy Agency (IEA), the vast majority of EVs sold were cheaper than cars with a conventional engine. That contrasts sharply with the United States, where EVs are typically 30 per cent more expensive.
There are plenty of complaints that Chinese EVs have an unfair advantage when they hit the sales floor in other countries.
China’s centralized system means massive government support and subsidization of manufacturing. China places national interest as a corporate and manufacturing goal. According to the Center for Strategic and International Studies (CSIS), Chinese government subsidies
are estimated at $230.9 billion
from 2009 to 2023.
Wages for Chinese assembly line workers start at about US$4.20 an hour, vastly eclipsed by the base rate in North American auto manufacturing of US$29.
Although most of its production still feeds robust domestic market new sales abroad is increasingly important in China’s EVs manufacturing sector. Finding export markets for China’s firehose of EVs is seen as an existential pursuit.
“There are 200 EV producers in China, who collectively have created far more capacity than the domestic market can bear. Not surprisingly, production has expanded rapidly, leading to growing inventories. As a result, firms have engaged in a bitter price war at home and expanded efforts to promote export,” says a 2024 report by the U.S.-based CSIS.
“Despite the extensive government support and expansion of sales, very few Chinese EV producers and battery makers are profitable.”
Chinese gas-powered cars had struggled for years compared to the world’s automakers in Germany, North America, Japan and Korea.
Their march on the world began with a push in Bangladesh and India in 2018 and 2019, before turning to Europe and Latin America, finding success for offering vehicles with sound technology at a cheaper price.
In some export markets, Chinese EVs have achieved price parity or better compared with gas cars, such as in Thailand.
Recently, China has been manufacturing more than 70 per cent of EV exports around the world.
Tariffs, however, have been an impediment.
Even before U.S. President Donald Trump’s bullish embrace of tariffs, many Western countries have been wary of allowing a glut of Chinese EVs hit their markets. His predecessor, Joe Biden, imposed tariffs on China’s EVs, as did the European Union and Canada. Europe’s 38 per cent tariff was imposed when Chinese EVs went from being about one per cent of EVs sold in 2019 t
o more than 50 per cent by 2023
.
The China-built BYD Song, a popular pick, is almost half the price of the Tesla Model Y in Europe. Overall,
in Europe.
With trade barriers in Europe, Canada and the United States, Chinese manufacturers have been pushing other global markets.
As the price gap narrowed between a Chinese-made EV and a gas car, emerging EV markets in Asia and Latin America fueled explosive sales growth, increasing more than 50 percent in Vietnam and Thailand.
Brazil — Latin America’s biggest car market — became fertile ground.
EV exports to Brazil almost doubled in 2024, according to United Nations Commodity Trade data. In the last two years, the price gap between EV and gas in Brazil shrank from EVs being twice as expensive to within 25 per cent, sparking an 85 per cent jump in EV sales with the vast majority being made in China.
Price parity, or close to it, is seen as the goal needed to spark more robust EV sales in Canada and the United States.
According to data from the IEA, average EV car prices in China had dropped below those of gas cars in 2023. In contrast, EV cars in North America were about 21 per cent more expensive and in Europe about 38 per cent more. That leaves a big gap to be bridged.
Chinese export EVs are not as cheap as they are in its domestic market, where they sell for between US$10,000 to US$20,000. A study
comparing the prices of the Chinese EVs
found that the same models were between 49 per cent and 112 per cent more expensive in Germany than in China.
The new trade deal struck by Carney and Xi Canada will allow
up to 49,000 Chinese EVs into the Canadian market
with tariff rate dropped from 100 per cent to 6.1 per cent, according to the Prime Minister’s office.
Half of the imported vehicles under the deal are “anticipated” to be affordable EVs with an import price of less than $35,000, creating new lower-cost options for Canadians, the PMO said.
The average price of a new car in Canada was recently pegged at $67,000. A recent search by Driving.ca
found the cheapest new car in Canada
was the Nissan Versa with a base price of $20,798, with the cheapest EV in Canada being the Nissan Leaf, with a base price of $41,748.
• Email: ahumphreys@postmedia.com | Twitter: AD_Humphreys
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