Tesla is taking advantage of a change in Canada’s policy on Chinese electric cars to sell the Model 3 at a considerably lower price in the country, and it might have an effect on the EV market as a whole, including for U.S. buyers.
Canadian customers can buy the Model 3 Premium RWD starting at $39,490 CAD, or about $29,000 USD.
Americans currently have to pay at least $36,990 USD for a basic version of the sedan that drops comforts like the backseat touchscreen, power-adjusted steering wheel, and FM radio. An equivalent to Canada’s offering costs $42,490 USD, although it has a longer claimed range of 363 miles versus 287 miles.
Tesla is managing the feat by delivering Model 3 units made at the company’s Giga Shanghai factory instead of a plant in Fremont, California. The Performance AWD model still comes from the U.S., however, leading to a much steeper $74,990 outlay. The Premium doesn’t qualify for the recently-instituted $5,000 Electric Vehicle Affordability Program rebate as it requires production in countries that have free trade deals with Canada.
Why is Tesla Canada selling a Model 3 from ChinaTariffs and warming political relations are the key
Tesla
Tesla is no stranger to selling Chinese Model 3 cars in Canada, but switched to American production in late 2024 when the Canadian federal government applied a 100 percent tax on China-made EVs. The move became impractical when the U.S. started its tariff campaign in 2025, prompting Canada to respond with a 25 percent tariff of its own on American-built vehicles.
However, Canadian Prime Minister Mark Carney negotiated a deal with China in January 2026 that helped thaw relations, lowering the duty on Chinese-manufactured EVs to 6.1 percent with an annual quota of 49,000 cars. That made the Shanghai-assembled Model 3 viable once again.
The trade agreement has opened the door to Chinese brands, with auto giant BYD planning to open 20 dealers within the space of a year. However, Tesla already has sales and delivery pipelines in Canada that help it move faster and potentially limit BYD’s success.
How will Tesla Canada’s cheap Model 3 affect the US?The Chinese EV puts more pressure on American brands
Tesla
You’re unlikely to see Tesla offer the China-made Model 3 to U.S. customers. Tariffs over 100 percent effectively block sales of all Chinese EVs in the country, and there are concerns about both protecting domestic manufacturers and the risk of the Chinese government misusing car data. Foreign automakers have factories in Canada, but no major firms based in the country.
However, the move could still affect the EVs you buy stateside. While a few cars cost less, like the limited-run Chevy Bolt, equivalents to the Model 3 typically cost more. Chevy’s next-step-up Equinox EV begins at $34,995, for instance. If American makes want to compete in Canada and other markets where Chinese EVs are available, they may have to build more affordable options.
The American response might already be coming
There are already hints of U.S. EVs that will better match the Chinese-made Model 3. Ford has already teased a $30,000 mid-size electric pickup truck that would be built on a new Universal EV Platform, while Tesla itself is reportedly reviving plans for a cheap EV despite its pivot toward autonomous cars and robots.
The American EV market is rough as the end to federal tax credits has priced out many buyers, but shopper might not have to look to Canada with envy for much longer.
Source: Tesla