Joly Heads to Shanghai to Court Chinese EV Investment

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Canada’s pursuit of a new automotive future is taking Industry Minister Mélanie Joly directly to the factory floors and research centres of China’s electric-vehicle industry. During a four-day visit, Joly is expected to meet executives from BYD, Chery, Geely and Shanghai Launch Automotive Technology—companies that Ottawa says are examining potential investments in Canada.

The mission represents a striking change in Canada’s relationship with Chinese automakers. Less than two years after imposing a prohibitive tariff on Chinese-made EVs, Ottawa is now offering limited market access while attempting to secure factories, technology and Canadian jobs in return. Whether that strategy produces a genuinely Canadian manufacturing operation—or simply another source of imported vehicles—will determine how the trip is ultimately judged.

A Sales Mission With Factory-Floor Ambitions

Joly’s itinerary is designed to move beyond conference-room diplomacy. The minister is expected to visit BYD’s manufacturing base in Changzhou, Shanghai Launch’s operation in Wuxi, Chery’s headquarters and Geely’s Shanghai research centre. The four companies have been assessing opportunities in Canada, according to Joly, giving the trip a more concrete purpose than a general effort to improve commercial ties with Beijing.

The distinction matters because Ottawa is not merely asking Chinese manufacturers to place vehicles in Canadian showrooms. The government wants them to consider assembly, components, research and other operations that would create lasting economic activity. A dealership launch can introduce a brand within months, but a factory requires years of planning, regulatory approvals, supplier agreements and billions of dollars in capital. Joly’s challenge is to convince executives that Canada offers enough market access, skilled labour, infrastructure and export potential to justify that much larger commitment.

Why These Chinese Automakers Matter

The companies on Joly’s schedule are not marginal manufacturers searching for their first international customers. BYD sold approximately 4.6 million vehicles in 2025, including more than 2.2 million fully electric models. It has rapidly expanded outside China and is developing or pursuing production facilities in Europe and other international markets. Geely Holding’s brands sold more than 4.1 million vehicles during the same year, with electrified models representing more than half of the group’s volume.

Chery, meanwhile, sold about 2.8 million vehicles in 2025 and has become China’s largest vehicle exporter. Its overseas approach may be especially relevant to Canada: the company already uses partnerships and shared manufacturing facilities to establish production in foreign markets, including a joint venture at a former Nissan plant in Barcelona. The inclusion of Shanghai Launch Automotive Technology also suggests that Ottawa is looking beyond traditional assembly toward vehicle software, engineering and advanced manufacturing capabilities. Collectively, the companies represent the scale, speed and technology that have transformed China into the centre of the global EV industry.

From a 100% Tariff to a 49,000-Vehicle Opening

Canada’s approach to Chinese EVs has changed dramatically. Ottawa imposed a 100% surtax in 2024, arguing that Chinese manufacturers benefited from state-directed subsidies and excess production capacity. Under a new Canada-China arrangement announced in January 2026, Canada instead agreed to admit as many as 49,000 Chinese-made EVs annually at the regular 6.1% most-favoured-nation tariff rate.

That quota represents less than 3% of Canada’s new-vehicle market, allowing Ottawa to describe the opening as controlled rather than unrestricted. The government expects the arrangement to encourage Chinese joint-venture investment within three years. It also anticipates that, within five years, more than half of the permitted vehicles will have import prices below $35,000. The EV concession formed part of a broader reset under which China reduced or removed major barriers affecting Canadian canola and other agricultural exports. For Ottawa, the quota is therefore both a consumer policy and a bargaining tool intended to turn market access into investment.

Ottawa Wants Canadian-Controlled Production

Joly is reportedly taking four major expectations into her discussions. Any proposed operation would need to be structured as a Canadian-controlled joint venture, with Canadian ownership exceeding 50%. It would also be expected to use locally produced components, comply with Canadian labour standards and protect vehicle and customer data. Those conditions are intended to prevent investment from becoming little more than the assembly of imported vehicle kits.

The model would combine Chinese EV platforms and manufacturing knowledge with Canada’s existing industrial strengths. Magna, Linamar and Martinrea are internationally established Canadian suppliers with experience operating in China, while Ottawa-based QNX provides software used in vehicles around the world. Magna already assembles vehicles for Chinese manufacturer XPeng in Austria, demonstrating that a Chinese platform can be paired with production and expertise from another country. Ottawa’s preferred outcome is a similar arrangement in Canada—one that generates supplier contracts, engineering work and intellectual property rather than concentrating the economic value overseas.

A Bet on Jobs, Not Just Cheaper Cars

The stakes extend far beyond the price of the next electric crossover. Canada’s automotive sector supports more than 500,000 workers, contributes over $16 billion to annual gross domestic product and produced more than 1.2 million passenger vehicles in 2025. Approximately 125,000 people hold direct automotive manufacturing jobs, while many additional livelihoods depend on parts, logistics, equipment, dealerships and specialized services.

Those numbers help explain why Ottawa is insisting on local production. An influx of lower-priced imported vehicles could benefit households but place additional pressure on Canadian assembly and parts operations if no corresponding investment followed. A plant that purchased Canadian steel, aluminum, electronics and components would distribute its benefits much more widely. In communities shaped by automotive work, the difference is tangible: a new model allocation can sustain shifts, apprenticeships and nearby suppliers, while a cancelled program can quickly affect restaurants, contractors and family finances. Joly must show that engagement with China can strengthen that ecosystem rather than gradually replacing it.

Affordability Will Be the First Consumer Test

Canada’s EV transition has struggled with a basic obstacle: many households still consider electric vehicles too expensive. Zero-emission vehicles reached 14.6% of new registrations in 2024, but their share fell to 8.7% in the first quarter of 2025 as incentives disappeared and concerns about prices and charging remained. Chinese manufacturers have gained global attention partly because their battery supply chains and highly integrated production systems allow them to offer sophisticated vehicles at lower prices.

The new quota could introduce more competition, although its limited size means it will not transform the market overnight. Canada’s separate EV Affordability Program provides incentives of up to $5,000 for qualifying battery-electric vehicles, but imported vehicles from China do not automatically qualify because the standard program is tied to countries with Canadian free-trade agreements. Even without a rebate, lower-priced Chinese models could pressure established automakers to adjust equipment, financing or prices. For a household replacing an aging gasoline vehicle, that competition may be the most immediately visible result of Joly’s outreach.

Washington Remains the Biggest Constraint

Any Canadian-Chinese vehicle partnership must confront the reality that Canada’s auto industry was built around the United States. More than 90% of Canadian-made vehicles and roughly 60% of Canadian-made auto parts are exported south of the border. Canadian production decisions are therefore normally based on access to a continental market, not solely on demand from Canada’s much smaller population.

American policy could make that model difficult for vehicles involving Chinese technology. Washington has maintained rules restricting Chinese-linked connected-vehicle software and hardware because of national-security and data concerns. U.S. Trade Representative Jamieson Greer has indicated that the Trump administration does not plan to soften those restrictions. A vehicle could potentially satisfy North American content rules yet remain unacceptable in the United States because of its software, ownership or technology. Canada would then need to rely on domestic sales and exports to Europe or other markets. Ottawa has trade agreements covering 51 countries, but building a competitive export operation without dependable U.S. access would be a significant commercial test.

The Deal Will Be Judged by What Gets Built

The Shanghai meetings may produce encouraging statements, but Ottawa will eventually need measurable commitments. A credible agreement would identify a Canadian site, investment value, production target and construction schedule. It would also establish Canadian ownership, supplier-content requirements, worker protections, research activity, data safeguards and an export strategy. A small finishing operation dependent on imported kits would deliver far fewer benefits than a plant with substantial Canadian parts and engineering.

Every proposed investment would also face federal review. The Investment Canada Act permits Ottawa to examine foreign investments of any size for potential national-security concerns, including risks involving sensitive technology, supply chains, personal information and economic security. After China, Joly is expected to travel to Japan to meet Honda and Toyota, whose Canadian plants account for a large majority of domestic vehicle assembly. That next stop underscores the broader strategy: Chinese investment is being pursued as an addition to Canada’s existing automotive relationships, not a substitute for them. The objective is diversification—but only on terms that leave Canada building more of the vehicle, not merely buying it.

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