For Chinese automakers, markets like Canada are more important than ever

As electric vehicles make their way here on cargo ships from China, export markets like Canada are becoming ever more crucial to Chinese carmakers during a seismic shift in the global auto industry.

Dozens of those companies are grappling with factors at home that have driven them to focus on selling cars to other countries to keep up production levels. Meanwhile, overseas markets are attempting to balance accepting a new era of Chinese EV dominance with protecting any existing auto industries through tariffs and import caps.

China’s domestic market appears to be maturing. While New Energy Vehicles (NEVs), an umbrella term for all types of electric cars, make up more than half of all new vehicle sales in China, the industry there is facing a transformation as consumer demand slows while government subsidies shrink along with trade-in incentives.

Meanwhile, intense competition is driving profit margins down as automakers try to one-up each other with the latest tech and pricing.

The market had “grown addicted … to significant domestic sales growth” over a 17-year period, said Bill Russo, former Chrysler auto executive and founder and CEO of Shanghai-based advisory firm Automobility Ltd.

So there is no choice but to look to other markets in order to expand, he said.

“The only other option you have is either to reduce the amount of supply, and companies don't do that very easily, especially Chinese companies,” he said.

Data compiled by the International Energy Agency (IEA) reflects this reality. Domestic NEV sales in China declined by roughly 25 per cent in the first quarter of 2026 compared with the same period the previous year. At the same time, exports more than doubled.

Chinese-made NEVs are headed all over the globe, especially to regions that have not implemented import controls.

According to export data, that includes the majority of its cars going to Russia, Brazil and the United Arab Emirates in the first quarter of 2026.

Europe continues to grapple with its own rules around allowing these cars, though last year, 940,000 Chinese-made electric cars were sold, a jump of about 50 per cent from the previous year.

In the same time period, that growth was a staggering in the Global South — 130 per cent in Southeast Asia, 60 per cent in the Middle East and 55 per cent in Latin America.

The U.S. has continued to block Chinese EVs from entering with a 100 per cent tariff put in place by former president Joe Biden.

Shifting focus from domestic sales to exports isn't unique to the Chinese industry.

“It’s a natural phenomenon,” said Lei Xing, an independent auto consultant based in Easthampton, Mass., who spent 20 years covering the Chinese auto industry in Beijing.

Xing pointed to the example of Japanese and German companies where exports are now the majority of their global sales.

“The same is happening in China.”

This industry maturation is happening as the global auto landscape undergoes a shift — arguably the largest in generations — amid a multitude of factors.

Geopolitical realities like the war in Iran and the Middle East are pushing oil prices up, while U.S. President Donald Trump’s global tariff war is driving various countries to look elsewhere for friends and trading partners.

Meanwhile, the world’s second largest economy, China, has been pushing for almost two decades for dominance in technology and green energy, including in the EV space.

Now that it has become the leader worldwide, other countries have little choice but to consider letting in Chinese EVs, and with them, the potential of well-honed Chinese research and development, say some analysts.

“These cars would not be in demand if they weren't really, really good products,” said Tu Le, managing director of advisory firm Sino Auto Insights, who spent years working with Ford in Beijing.

Canada is no exception. Under Prime Minister Mark Carney, the punishing 100 per cent tariffs on Chinese EVs were scrapped after a trip to China in January 2025 and exchanged for a tariff-quota deal instead, with Beijing dropping some duties on Canadian canola.

Ottawa now allows up to 49,000 Chinese EVs into Canada annually at a 6.1 per cent tariff with a a maximum six-month quota of 24,500 cars.

The first 2,910 of those arrived in May, according to import data. While the majority of those are reportedly Teslas made at its Shanghai factory, EVs made by Chinese companies like Geely will soon follow.

While the number of cars arriving is small, having Chinese EVs land in Canada and Mexico is significant for North America.

The Canada-U.S.-Mexico trade agreement is up for review July 1, with Canada wanting renewal and the U.S. president casting doubt on whether that will happen. The future of the auto industry is expected to be a major factor in negotiations, and Chinese EVs could play heavily into that.

As Trump looks to bring manufacturing stateside with his tariff war, those Chinese automakers will be eyeing the U.S. market, wanting to gets their cars on American roads, said Le with Sino Auto Insights.

WATCH | China's EV success formula and Canada's dilemma:

Canada has cracked open the door to Chinese-made electric vehicles and the impact could be transformational. For The National, CBC’s Chris Brown breaks down how China became the world’s EV leader and what it could mean for the North American automotive industry.

“The jewel of North America is the United States market for the Chinese,” he said.

One way China could make inroads that are more politically palatable is to invest in manufacturing in the countries they're exporting to, like Ontario Premier Doug Ford has suggested.

Broadly, the shift toward Chinese EVs is likely to have a real impact on consumer choice.

In the Global South, the lower prices, like roughly $10,000 US for the BYD Seagull, means more people can afford EVs. (For comparison, the more affordable models of non-Chinese EVs start at about $40,000 in Canada.)

“We’re missing [this trend] because these are relatively small markets,” said Ilaria Mazzocco, deputy director with the Trustee Chair in Chinese Business and Economics at the Center for Strategic International Studies in Washington, D.C.

However, she says the reach is “transformational” as the Chinese companies are “providing solutions that cater to the demands of the middle class [where] the Western automakers are perceived as not being able to provide those solutions.”