BEIJING/SHANGHAI, Jan 19 (Reuters) – Tesla is poised to be one of the first automakers to benefit from Canada’s move to remove 100% tariffs on Chinese-made EVs, thanks to its early efforts to ship cars from its Shanghai plant there and its established Canadian sales network, experts say.
According to the agreement announced last Friday, Canada will allow up to 49,000 vehicles to be imported annually from China at a 6.1% tariff on most-favoured-nation terms. Canadian Prime Minister Mark Carney said that the quota could rise to reach 70,000 vehicles within five years.
However, under one clause in the agreement, half of the quota will be reserved for vehicles under 35,000 CAD ($25,189). Tesla model prices are all higher than that number.
While many Chinese automakers will be eager to seize the opportunity as they expand exports, Tesla has an advantage in that in 2023 it has already equipped its Shanghai plant, its largest and most cost-efficient factory globally, to build and export a Canada-specific version of its Model Y.
This same year, the US automaker began shipping cars from Shanghai to Canada, increasing Canadian car imports from China to its largest port, Vancouver, by 460% year over year to 44,356 in 2023.
But it was forced to stop in 2024 and switched to shipping from its US and Berlin factories after Ottawa imposed 100% tariffs, citing a desire to combat what it called China’s state-directed intentional policy of overcapacity.
Now, it ships Model Ys produced in Berlin to Canada, but more variants like cheaper Model 3s are mostly built in China.
“This new agreement could allow those exports to resume fairly quickly,” said Sam Fiorani, vice president of research firm AutoForecast Solutions.
Tesla has an existing network of 39 stores in Canada, while Chinese rivals such as BYD and Nio do not yet have a sales presence there, and it can probably also move faster with marketing plans since it only has four main models, far fewer than its Chinese competitors.
“Tesla indeed has an advantage with its offer of few models, versions and simple production lines so that it can be flexible to sell cars produced in any country in any market to achieve the best cost efficiency,” said Yale Zhang, managing director at Shanghai-based consultancy AutoForesight.
Tesla did not immediately respond to a Reuters request for comment.
Other brands that exported Chinese-made cars to Canada before the tariffs included Volvo and Polestar, which are both owned by China’s Geely car manufacturing group.