Canada\u2019s Industry Minister M\u00e9lanie Joly is in China this week courting four Chinese automakers she wants to build electric vehicles on Canadian soil, the clearest test yet of whether Ottawa can convert tariff relief into local factories.<\/p>\n
Joly is meeting\u00a0BYD<\/a>, Chery<\/a>, Geely<\/a> and Shanghai Launch Automotive Technology, each of which has been weighing a Canadian investment, she told\u00a0The Globe and Mail.<\/p>\n Shanghai Launch\u2019s proposal involves a tie-up with British automaker Austin Motor Co.<\/p>\n Her four-day itinerary opens in Shanghai with stops at\u00a0BYD<\/a>\u2018s manufacturing base in Changzhou and Shanghai Launch\u2019s Wuxi site, followed by Chery<\/a> and a visit to Geely<\/a>\u2018s Shanghai research and development centre, before a Beijing leg later in the week.<\/p>\n The objective is manufacturing, not imports, and Joly casts it as a balancing act.<\/p>\n \u201cWhat is important is how can we make sure that we offer great vehicles to Canadians that are actually affordable, and with the latest technology, while keeping and protecting our 500,000 auto workers,\u201d she told the newspaper.<\/p>\n \u201cMy job is to square that circle, and the Prime Minister has given me the mandate to really be able to work with the sector and work with the Chinese automakers.\u201d<\/p>\n The Terms She\u2019s Carrying In<\/p>\n Joly is holding to four conditions, unchanged for these talks, that any Chinese EV investment must satisfy.<\/p>\n The deal must be structured as a joint venture that is majority Canadian-owned, meet Canadian labour standards, use Canadian parts, and run on software that is secure and protects user data.<\/p>\n Joly also wants Canadian firms doing contract manufacturing for Chinese brands, pointing to Magna International, which already assembles vehicles for XPeng at a plant in Graz, Austria.<\/a><\/p>\n What the Automakers Have Said<\/p>\n The three biggest names on Joly\u2019s list have staked out sharply different positions.<\/p>\n BYD<\/a>\u00a0has been the most direct, and the most at odds with Ottawa. <\/p>\n Executive VP Stella Li told\u00a0Bloomberg\u00a0the company is studying a Canadian plant but would insist on owning and operating it outright,\u00a0rejecting the joint-venture model<\/a>\u00a0Joly has set as a condition.<\/p>\n \u201cI don\u2019t think a JV will work,\u201d Li said, pointing to\u00a0BYD<\/a>\u2018s vertical integration, since the company builds its own batteries, motors and chips.<\/p>\n Li also signalled openness to buying an established carmaker rather than starting from scratch, telling\u00a0Bloomberg\u00a0that \u201cwe\u2019re open to every opportunity we have\u201d and \u201cwe\u2019ll see what benefits us,\u201d while noting no deal was in the works.<\/p>\n Geely<\/a> has struck a warmer note. The group\u2019s chief executive\u00a0confirmed at the executive level<\/a>\u00a0that Geely is entering the Canadian market, said certification for its Geely-branded vehicles should come \u201csoon,\u201d and pointed to local production \u2014 a stance that fits Joly\u2019s framework more comfortably.<\/p>\n Geely also starts from a foothold its rivals lack, already operating in Canada through Volvo and Polestar, and has\u00a0begun hiring<\/a>\u00a0in Toronto while trademarking its Zeekr brand there.<\/p>\n Chery, the third name, has said the least on the record, and did not respond to the Globe\u2019s emailed questions. The Wuhu-based exporter\u2019s\u00a0recruitment messaging<\/a>\u00a0seen by the newspaper framed its Toronto hiring as a \u201clong-term decision to invest and grow its business in Canada,\u201d with its Omoda and Jaecoo<\/a> brands leading the push.<\/p>\n A Deal Built on Canola<\/p>\n The visit grows out of a January reset.<\/p>\n Prime Minister Mark Carney, the first Canadian leader to visit China since 2017, agreed in Beijing to cut Canada\u2019s 100% tariff on Chinese-made EVs<\/a> to 6.1% on an annual quota of 49,000 vehicles, in return for Beijing easing the retaliatory duties that had shut Canadian canola out of the Chinese market.<\/p>\n Ottawa cast the quota as leverage, saying it expected Chinese joint-venture investment within three years.<\/p>\n How swiftly Ottawa\u2019s posture turned is striking.<\/p>\n Former industry minister Fran\u00e7ois-Philippe Champagne told Canadians in May 2024 that Canada would \u201cnever\u201d serve as a backdoor for Chinese EVs into North America \u2014 a stance\u00a0since reversed<\/a>\u00a0by the quota Joly now administers.<\/p>\n \u201cWe Can\u2019t Bring Cars in a Kit\u201d<\/p>\n Joly has already shown where her conditions bite.<\/p>\n In April, she rejected Stellantis<\/a>\u2018s plan to assemble Leapmotor electric cars from kits shipped from China at the automaker\u2019s idled plant in Brampton, Ontario, an arrangement that\u00a0EV reported<\/a>\u00a0would have made Leapmotor the first Chinese brand to build vehicles in Canada.<\/p>\n \u201cWe can\u2019t bring cars in a kit to Canada,\u201d she said, adding that the plant\u2019s output \u201cneeds to support the local supply chain.\u201d<\/p>\n Ottawa\u00a0cut Stellantis\u2019s tariff-free import quota in half<\/a>\u00a0and filed a notice of default over the Brampton funding agreement, through which the company drew up to $529 million in federal subsidies to retool the plant for an electric Jeep Compass it later moved to Illinois.<\/p>\n \u201cI\u2019ve been clear with the company and we will get our money back unless they bring back production,\u201d Joly said.<\/p>\n The Quota Keeps Moving<\/p>\n Even after that rejection, Joly confirmed the import quota would proceed.<\/p>\n \u201cWe\u2019ll continue with what we\u2019ve done, which is 49,000 electric vehicles coming from China. We already have companies approaching us,\u201d she said, adding, \u201cAnd we\u2019ll make sure that we abide by our agreement with China.\u201d<\/p>\n The early entrants are arriving.<\/p>\n Lotus<\/a>, the Geely-controlled British marque, has\u00a0shipped its first batch<\/a>\u00a0of Chinese-made Eletre SUVs into Canada, while\u00a0Tesla<\/a>\u00a0became the first Western automaker to route a China-built model through the framework, pricing the Shanghai-made Model 3 in Canada from C$39,490.<\/p>\n Officials have separately\u00a0weighed a cap<\/a>\u00a0on how much of the 49,000-unit quota any single automaker can claim.<\/p>\n The Latest in a Series<\/p>\n Joly\u2019s Shanghai meetings are not Ottawa\u2019s first approach to Chinese automakers since the January deal.<\/p>\n International Trade Minister Maninder Sidhu held\u00a0Guangzhou meetings<\/a>\u00a0with\u00a0BYD<\/a>, XPeng<\/a> and GAC in April, on the first visit by a Canadian minister to South China since 2018, discussing market-entry pathways under the import quota, supply-chain requirements and longer-term investment.<\/p>\n The trip widened the field beyond the names Joly has courted, drawing in Guangzhou-based XPeng \u2014 which runs two plants in the city and an eVTOL arm \u2014 and GAC, whose Aion marque leads its EV lineup.<\/p>\n \u201cChina makes some of the most advanced electric vehicles in the world,\u201d Sidhu wrote on X, framing the outreach as a way to give Canadians affordable EVs by \u201cworking with global partners.\u201d<\/p>\n He said he had met\u00a0BYD<\/a>, XPeng and Aion to discuss \u201cutilizing the Canadian supply chains to build the very cars in Canada.\u201d<\/p>\n A Wider Trade Mission<\/p>\n The China trip extends well beyond cars.<\/p>\n A large delegation of Canadian executives is joining Joly for the Beijing leg, among them Dominic Barton, the former ambassador to China and now chair of Rio Tinto, Canada Goose chief executive Dani Reiss, Cameco\u2019s Tim Gitzel, Teck Resources\u2019 Jonathan Price, CPP Investments\u2019 John Graham, Sun Life\u2019s Kevin Strain and Power Corp.\u2019s Olivier Desmarais, with much of the agenda aimed at expanding Canadian exports to China.<\/p>\n In Beijing, Joly\u2019s tentative schedule includes VP Han Zheng, economic-planning chief Zheng Shanjie and industry minister Li Lecheng, meetings her office said were not yet confirmed.<\/p>\n The Shadow of Washington<\/p>\n Courting Chinese automakers carries an obvious risk: irritating the United States as Canada negotiates the renewal of the trilateral trade pact governing continental commerce.<\/p>\n United States Trade Representative Jamieson Greer called Canada\u2019s decision to let some Chinese EVs sidestep the steep tariffs \u201cproblematic\u201d and suggested Canada would regret it.<\/p>\n The rethink was forced by Washington itself.<\/p>\n President Donald Trump\u2019s tariffs on Canadian-built cars, and his suggestion that the United States does not need them, have pushed Ottawa to look elsewhere \u2014 and Canadian-made exports to the US now hinge on the outcome of the pact\u2019s renewal.<\/p>\n Joly said Canada is also in talks with the European Union about exporting Canadian-built vehicles there, even as China\u2019s largest automakers race to build EVs inside the bloc, at plants in Hungary and Spain, to dodge the EU\u2019s own tariffs.<\/p>\n Then to Tokyo<\/p>\n From China, Joly travels to Japan on Friday to meet executives at Honda and Toyota, which together account for roughly 77% of Canada\u2019s auto assembly.<\/p>\n