Tesla (TSLA) Stock: Canada Just Handed Tesla a Major Win on Chinese EVs

TLDR

• Canada removed 100% tariffs on Chinese-made EVs, allowing up to 49,000 vehicles annually at 6.1% tariff
• Tesla can resume shipping Model Y vehicles from its Shanghai factory to Canada after stopping in 2024
• Tesla already equipped its Shanghai plant in 2023 to build Canada-specific Model Y versions
• Half the import quota is reserved for vehicles under CAD $35,000, below most Tesla prices
• Tesla has 39 stores in Canada while Chinese rivals like BYD and Nio have no sales presence there

Canada’s decision to slash tariffs on Chinese-made electric vehicles puts Tesla back in the driver’s seat. The new trade deal announced Friday drops the tariff rate from 100% to 6.1%. This reopens a market Tesla had to abandon just over a year ago.

The agreement allows up to 49,000 vehicles per year to enter Canada from China. Prime Minister Mark Carney said the quota could climb to 70,000 vehicles within five years. The 6.1% rate applies to most-favored nation terms.

Tesla stopped shipping from Shanghai to Canada in 2024 when Ottawa imposed the 100% tariffs. The government cited concerns about China’s state-directed overcapacity policies. Tesla switched to shipping Model Ys from its Berlin and U.S. factories instead.

Tesla, Inc., TSLA

The company now ships Berlin-made Model Ys to Canada. But cheaper variants like most Model 3s are primarily built in China. The Shanghai factory remains Tesla’s largest and most cost-efficient plant globally.

Tesla prepared for this moment back in 2023. The company equipped its Shanghai facility to build Canada-specific Model Y versions that year. It started shipping these vehicles to Vancouver, boosting Canadian automobile imports from China by 460% year over year to 44,356 in 2023.

Tesla’s Head Start in Canada

Sam Fiorani from AutoForecast Solutions said the new agreement could allow Tesla to resume exports rather quickly. The company maintains 39 stores across Canada. Chinese competitors like BYD and Nio have no sales presence in the country yet.

Tesla’s simpler product lineup gives it another edge. The company sells four core models compared to Chinese competitors with broader ranges. Yale Zhang from AutoForesight said this flexibility lets Tesla sell cars from any factory in any market to maximize cost efficiency.

The deal includes a catch for Tesla. Half the import quota is reserved for vehicles priced under CAD $35,000, which equals about $25,189 USD. All Tesla models sit above that price point.

Chinese Automakers Eye Opening

Fiorani said the price clause likely benefits Chinese automakers and Canadian buyers seeking entry-level vehicles. John Zeng from GlobalData noted the quota offers Chinese carmakers a chance to test the waters. Canada has a large Chinese Canadian population.

Canada wants to explore joint ventures with Chinese companies over the next three years. The goal is building a Canadian electric vehicle using Chinese expertise, according to CBC. BYD already operates an electric bus assembly plant in Ontario.

Volvo and Polestar also exported China-made cars to Canada before the tariff hike. Both brands are owned by Chinese automaking group Geely. Neither company responded to requests for comment. Tesla also did not respond to requests for comment.

The Trump administration criticized Canada’s decision. The Biden administration had quadrupled U.S. tariffs on Chinese EVs to 100% in 2024. This effectively blocked Chinese EV exports to the United States.

Tesla’s Shanghai plant can now ship to Canada again under the 6.1% tariff structure.

The post Tesla (TSLA) Stock: Canada Just Handed Tesla a Major Win on Chinese EVs appeared first on CoinCentral.