Canada tells Chinese automakers to ‘build where you sell’ when it comes to electric vehicles

Ottawa is seeking new partnerships in Japan as Chinese EVs enter Canada. Judy Trinh reports from a major trade mission in Tokyo.

TOKYO, Japan - Industry Minister Melanie Joly said she has made it clear to four Chinese electric vehicle makers that getting more access to the Canadian market will require them to “build where you sell.”

But as she courts Chinese EV manufacturers to build another lifeline for the domestic auto industry as it buckles under the uncertainty of the CUSMA review, Japanese auto manufacturers are voicing concerns about the federal government’s embrace of their biggest regional competitor.

This past week during a visit to China, Joly met with executives from BYD, Chery, Geely and Shanghai Launch Automotive Technology. The minister said the four companies want to eventually expand beyond the current quota of allowing 49,000 Chinese EVs into Canada this year.

Earlier this year, during Carney’s trip to Beijing, Canada agreed to allow up to 49,000 Chinese EVS under a reduced tariff of 6.1 per cent, in exchange for China lifting retaliatory tariffs on some Canadian agricultural products.

Speaking to CTV News on the sidelines of a Team Canada trade mission to Japan, Joly insists strict conditions will be put on potential manufacturers.

According to Joly, EV assembly plant must be set up as a joint venture with majority Canadian ownership. It must use Canadian supplies and abide by the country’s labour codes. For Chinese companies to make EVs in Canada, they also need to ensure data security. For example, guarantee that user data collected by the vehicle won’t be transferred to the Chinese government when drivers connect their cell phone to the car.

Joly also implied that progress was made in persuading Chinese auto makers to set up shop in Canada.

“I don’t expect it to lead to results in days, but there can be positive conversations leading potentially to decisions in future months,” she said.

But that is a concern to Japanese auto companies operating in Canada.

Kenichi Kawaji, the President and CEO of Mitsubishi Motor Sales of Canada, tells CTV News that Chinese EVs are difficult to compete against.

“Chinese EVs are very nice. Its exterior and interior technology is amazing, with a good price. It will be difficult to fight,” Kawaji said, later adding that he doesn’t expect a surge in sales of Chinese EVs in the short term because Canada doesn’t yet have the charging infrastructure in place to support it.

While Mitsubishi does not have a manufacturing plant in North America, Kawaji says Mitsubishi will adapt by investing more in hybrid alternatives

After Honda recorded US$15 billion in losses globally, it shelved a plan indefinitely to build EVs at its Alliston, Ont. plant.

In a speech delivered in front of auto parts manufacturers in June, Honda Canada President Dave Jamieson said that “policy decisions here at home are actively making Canada less competitive at exactly the moment we need to be strengthening our position.”

Jamieson pointed fingers at CUSMA negotiations, U.S. tariff exposure and trade uncertainty, but also blamed “new entrants into Canada.”

“Canadian auto makers face rising competition from low-cost, state-subsidized, non-market-oriented producers,” Jamieson said according to the transcript of his speech.

Joly, who also met with Honda executives in Japan, said that she speaks frequently to Jamieson and “rejects the premise” that the government’s China EV policy is putting manufacturing plants run by Canada’s allies at risk. More than 75 per cent of the vehicles assembled in Canada are made at Toyota or Honda plants.

“We’re not putting any businesses in jeopardy. I reject that premise. We’re offering the best technology for Canadians while protecting 500,000 workers. We want to make sure we’re increasing our manufacturing footprint in Canada,” Joly said.

Joly also hinted that good news was on the horizon for Honda’s Alliston, Ont. plant, but declined to say if EV production plans were back on track.