Three Chinese EV makers accept Canadian government's condition of 'joint venture with majority Canadian ownership'... paving the way for local production in North America

*This content was translated by AI.

Chinese automotive giants responded to a tough proposal from Canada's Minister of Trade, Industry and Energy, Melanie Joly. Leading Chinese electric vehicle (EV) manufacturers including BYD, Geely, and Chery have officially accepted the government's condition to establish local production plants in the form of joint ventures (JVs) with majority Canadian ownership, thereby securing a major foothold for entering the North American market.

Minister Melanie Joly of Canada's Ministry of Trade, Industry and Energy officially announced at a press conference following her recent visit to China: "As a result of meetings with the management teams of BYD, Geely, Chery, and the R&D company Shanghai Lanch Auto Automotive Technology, all these companies have expressed their positive consideration and acceptance of the proposal to establish joint ventures for local production in Canada."

The conclusion of these negotiations is a follow-up measure to the Canadian government's decision earlier this year to drastically reduce the existing 100% punitive tariff on Chinese-made EVs to 6.1%, in exchange for introducing a 'quota system' that limits annual import volumes to 49,000 units. Chinese companies have decided to accept the four stringent conditions set by the Canadian government to significantly expand their market share beyond the 49,000-unit limit: ▲establishment of a joint venture with majority Canadian ownership ▲mandatory use of local parts supply chains ▲compliance with Canadian labor laws ▲guarantee of driver data security within vehicles. Companies building local factories will be exempt from this import quota restriction.

As a result, Canada has gained a powerful ally capable of reviving its domestic automotive manufacturing industry, which has been suffering from severe stagnation (with production down 15% year-on-year), and protecting approximately 500,000 jobs in the automotive sector.

However, resistance from existing Japanese-owned automotive brands that have dominated the Canadian automotive market has reached its peak. Japanese executives, including Toyota and Honda which account for more than 75% of Canada's automotive production, strongly objected. Kenji Kawaji, CEO of Mitsubishi Motors Canada, stated, "Chinese EVs are superior in both technology and price, making it very difficult to honestly fight against them," openly expressing his sense of crisis. Dave Je I-mi-seun (President) of Honda Canada also strongly protested, saying, "Bringing in low-priced Chinese EVs with government subsidies is an act of undermining the competitiveness of allied country companies."

In addition, expert groups such as the Canadian Vehicle Manufacturers' Association (CVMA) pointed out another risk. With Chinese vehicles becoming increasingly visible in their attempts to use Canada as a transit base to cross the U.S. border, there are warnings that this could lead to massive retaliatory tariffs or trade friction with the United States, Canada's largest trading partner, at the time of renewing the United States-Mexico-Canada Agreement (USMCA).

With the agreement by Chinese EV giants to establish joint ventures in Canada, the North American automotive market is facing a major turning point. All eyes of the global automotive industry are focused on whether this will be a masterstroke to revitalize domestic manufacturing as the government claims, or a self-inflicted mistake that will ruin relations with the United States and existing Japanese allies.

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*This content was translated by AI.