After months of stalled momentum, Canada’s electric vehicle (EV) strategy is shifting gears – fast.
In a move aimed at accelerating EV adoption and lowering consumer costs, the federal government recently announced plans to allow up to 49,000 Chinese-made electric vehicles to enter Canada each year at a preferential tariff rate of 6.1 per cent.
But the announcement has ignited skepticism. Does opening the door to low-tariff Chinese EVs sharpen Canada’s competitive edge? Or does it undercut domestic manufacturers while deepening geopolitical risk?
As debate intensifies, Gal Raz, Ivey Associate Professor of Operations Management and Sustainability, cuts through the noise to explain what’s really at stake for Canada in Impact’s “Ask the Experts.”
Ivey Impact: To start with the potential opportunities, how could opening Canada’s market to Chinese electric vehicles benefit the country?
Gal Raz (GR): The biggest benefit is simple: affordability. For many Canadians, EVs remain financially out of reach – particularly since federal rebates were scaled back in 2025 – making price one of the most significant barriers to adoption.
Chinese EVs are expected to enter the market at substantially lower price points than many domestic options, making them more accessible for the average Canadian. Even if they represent only a small share of total sales, their presence could help stimulate demand, which could – in turn – snowball into strengthening Canada’s EV market and supporting future manufacturing and job growth at home.
Ivey Impact: What are the key risks Canada should be weighing alongside the potential benefits?
GR: There are two key risks. The first is pressure on Canada’s domestic auto industry. While increased competition may push manufacturers to become more price-competitive, vehicles produced in Canada and across North America will almost always carry higher costs. Without careful balance, this dynamic could strain local production and supply chains.
The second risk – and potentially more significant – is geopolitical. Simply allowing Chinese EVs into Canada has already become a point of friction with the United States, with President Trump threatening a 100 per cent tariff on Canadian goods. At the same time, the volatility of the current U.S. administration makes long-term certainty difficult. In that context, Prime Minister Carney’s approach can be seen as a strategic effort to diversify Canada’s economic relationships and reduce overreliance on a single trading partner.
Ivey Impact: What does Canada need to put in place to ensure affordable EVs deliver long-term benefits – not just short-term consumer wins?
GR: To make EVs work long term, Canada needs to move quickly on two fronts. First, faster investment in charging infrastructure is essential to give Canadians confidence that an EV will reliably fit into their daily lives – without worrying about running out of power. Making charging easier and more visible would support adoption across the market, regardless of brand.
At the same time, demand-side incentives need to return. The removal of federal EV rebates stalled adoption at a critical moment for the nation. Reintroducing targeted rebates, particularly for EVs made in Canada or North America, would help push the market past a tipping point where growth becomes self-sustaining.
With billions already invested in domestic EV and battery manufacturing, building demand at home is essential to long-term success.
Ivey Impact: For everyday Canadians, cheaper EVs may sound like a win, but are there less obvious concerns to consider?
GR: Yes, and the biggest concern is infrastructure. Lower prices are welcome, but they only go so far if Canadians can’t easily charge their vehicles at work or at home, a challenge many condo residents already face. Without meaningful improvements, some buyers may find EV ownership harder than expected.
There’s also an economic trade-off. Chinese EVs arrive as fully built vehicles, meaning they don’t support Canada’s growing EV and battery supply chain. Without policies that also encourage demand for locally produced EVs, increased imports could undercut domestic investment and jobs.
Data security concerns come up as well. While they shouldn’t be dismissed outright, they need to be kept in perspective; digital security risks exist across the entire connected vehicle market.
Ivey Impact: From an economic competitiveness perspective, what should Canada do next to manage the impact of Chinese EVs, while protecting our North American supply chain relationship with the U.S.?
GR: Canada is walking a fine line. With U.S. trade policy increasingly unpredictable, the country needs to diversify its economic partnerships, but it can’t lose sight of its deep, decades-long supply chain relationship with the United States.
At the same time, Canada needs to rebuild EV demand at home. Introducing lower-cost Chinese EVs can help restart a market that has stalled, but it can’t stop there. Policies and incentives must also support Canadian manufacturers, suppliers, and battery producers, otherwise, much of the economic benefit will flow elsewhere.
If managed well, this period of heightened competition can also work in Canada’s favour. Over the next few years, domestic producers will have an opportunity to learn – from pricing and features to consumer demand – and use those insights to strengthen their long-term competitiveness.
The challenge, and the opportunity, is careful balance: using affordability to reignite adoption, investing in domestic production, and managing geopolitical risk without walking away from North American integration.
Gal Raz is an Associate Professor of Operations Management and Sustainability and a Fellow at the Lawrence National Centre for Policy and Management at Ivey. His research focuses on supply chain management and sustainable operations, with particular emphasis on pricing, remanufacturing, innovation, and environmental regulation, and has been published in leading academic journals and featured in top media outlets. An award-winning educator, Raz has taught across Ivey’s HBA, MBA, PhD, and Executive Education programs. He has also developed numerous courses and nearly 20 teaching cases, which have sold more than 75,000 copies worldwide, including the award-winning Eastman Tritan case.
