Canada’s 100% tariff on made-in-China EVs is a Tesla tax

Ottawa announced on Monday that, starting on October 1, the country will impose a 100% tariff on electric vehicles built in China, mirroring measures taken by the US in May.  

That brings Canada’s total levy on imported Chinese EV to 106.1% compared to 102.5% in the US. A final determination on the US tariffs due to go into effect in August has been delayed.

While BYD wants to enter the Canadian market as early as next year possibly through a partnership with ride-sharing platform Uber, almost all Chinese imports into Canada currently are Tesla cars assembled in Shanghai. 

Made-in-China Model Ys and Model 3s, together with limited number of Geely-owned Polestar imports, represented 7% of EV sales in Canada during the first seven months of 2024. 

Tesla has approached Ottawa to negotiate a better deal like it was able to achieve in the European Union where its made-in-China vehicles only attract a 9% import surcharge.

World no 6

Canada is the world’s number six passenger electric vehicle market measured by the combined battery power deployed on the country’s roads so far in 2024.  

January through July this year, Canadian car buyers got the behind the wheel of EVs which together sport 7.3 GWh of battery power, placing the country ahead of Belgium and behind France with 6.2 GWh and 12.4 GWh a piece.  

The Canadian market measured in GWh capacity deployed is up 27% year to date compared to a more pedestrian 14% growth rate for its large neighbor to the south.  

Among the top 10 markets year to date Canada’s car parc expanded at the third fastest pace after Belgium (+37%) and China (+32%), but to put that into perspective, the Chinese market is almost 32 times the size of Canada’s.

Together the top 10 countries represent nearly 90% of global combined capacity deployment while Canada’s contribution to the worldwide car parc electrification was shy of 2% year to date.

SK On powers on

Korea’s SK On was the number one cell supplier in Canada capturing 29% of the domestic market in terms of battery capacity deployed after a 135% rise year over year from January through July this year.

SK On’s blowout performance came on the back of a surge in the GWh new owners of the Ford F-150 Lightning rolled onto the country’s roads and equally impressive growth rates for the Volkswagen ID.4 and Kia EV6 equipped with the manufacturer’s battery packs.

The contribution of Canada-made EVs like the Chrysler Pacifica hybrid and the GM Brightdrop delivery vehicle to the electrification of the country’s car parc remains minuscule, but is set to take off in coming years with more than $33 billion of announced investments (some of which are now under review) in the EV supply chain since 2020 according to figures from Ottawa.

Tesla tops, just

Tesla is ranked top automaker in Canada with a 24% share of the market in GWh, followed closely by Hyundai Motor which has upped the battery power its namesake and Kia brands have unleashed compared to last year by 171%.

At 1.7 GWh through July, the Korean group is now within shouting distance of Tesla which has seen battery power delivered to customers decline by more than 17% year over year.

Number three, Ford, achieved a year on year growth rate of 57%, while Volkswagen at no 4 grew by 63% making it the best performer among the top 10 car groups moving power hours inside the country.

The only Chinese group among the top tier is Geely and the combined battery capacity of the Volvo and Polestar badged EVs the company sells in Canada showed a slight decline during the first seven months of this year. Geely bought the Volvo marque from Ford in 2020.

Tesla’s Model 3 and Model Y led the pack for fresh power hours although both of the automaker’s workhorses experienced declines for the year with the compact SUV suffering a 25% decline year on year.

Canadian drivers prefer high-nickel battery chemistries with 77% of the combined battery capacity deployed during the period in the form of NCM 6-Series and higher, and NCA Gen 3 packs.

LFP battery powered Model Ys assembled in China and equipped with Chinese giant CATL’s packs afforded the cathode chemistry an 11% share of the market in Canada. Together with imported versions of the Model 3 and the Polestar 2, made-in-China EVs captured 11% of the overall market in GWh terms.

Plug-ins favored

In terms of registrations over the first six months of 2024, Canadians opted for full electric vehicles half the time while conventional hybrids and plug-in hybrids attracted 31% and 19% of the country’s EV buyers respectively.  

The overall market grew by just over 16% to nearly 171,000 units with BEVs up 24%, PHEVs jumping by 43% while 4% fewer HEVs left dealerships over the period.  

Electrified passenger vehicle sales made up 17% of overall vehicle sales in the country from January through July.