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Canada’s courtship of Chinese electric-vehicle manufacturers is no longer simply about opening dealership doors. Industry Minister Mélanie Joly travelled to China in June to meet companies including BYD, Chery, Geely and Shanghai Launch Automotive Technology, carrying a message that Ottawa wants investment tied to Canadian production. The push follows Canada’s decision to admit up to 49,000 Chinese EVs annually at the 6.1 per cent most-favoured-nation tariff rate, replacing the 100 per cent surtax for vehicles within the quota.
Ottawa now faces a difficult balancing act: make advanced EVs more affordable, attract new factories and reduce reliance on the United States without hollowing out a sector that supports more than 500,000 Canadian workers. Joly’s answer is a four-part test designed to ensure that market access produces more than imported cars and showroom jobs.
Majority Canadian Ownership Would Keep Control at Home
Joly Tells Chinese EV Makers to ‘Build Where You Sell’ as Ottawa Sets Four Conditions
Ottawa’s first condition is structural: any proposed Chinese EV manufacturing venture should be organized as a joint venture with majority Canadian ownership. That requirement is meant to ensure that a Canadian partner has more than a ceremonial role. A factory can create construction and assembly jobs while decisions about product design, sourcing, software and future investment remain elsewhere. Majority ownership gives Ottawa a clearer route to insist that strategic decisions, governance and a meaningful share of the economic value stay in Canada. It also fits the federal government’s broader claim that the new Canada-China automotive relationship should generate domestic manufacturing rather than merely restore imports. The distinction matters because Canada has already offered substantial support to build an EV and battery supply chain. A locally registered operation that only performs final assembly would not necessarily create the industrial capabilities taxpayers were promised.
The condition is also likely to be the hardest one to secure. BYD executive vice-president Stella Li said earlier in 2026 that the company was studying Canadian manufacturing but did not believe a joint venture would work, indicating that BYD would prefer to own and operate a plant itself. That position reflects the company’s highly integrated model, under which it produces important components including batteries, motors and semiconductors. Ottawa has already shown resistance to arrangements that appear too shallow. When a possible Stellantis-Leapmotor plan for Brampton surfaced, Joly rejected the idea of bringing vehicles into Canada largely as kits for local assembly. Even a majority-owned Canadian venture, however, would not automatically guarantee technology transfer. Analysts at the Asia Pacific Foundation of Canada have warned that ownership on paper could still leave the Chinese partner controlling platforms, battery architecture, source code and intellectual property. The real test will be whether Canadian ownership comes with Canadian capability.
Canadian Labour Standards Would Put Workers at the Centre
The second condition is that any Chinese-backed plant respect Canadian labour standards. On the surface, that may sound automatic: a factory in Ontario or another province would already be subject to employment, health-and-safety and labour-relations laws. Joly’s decision to state it explicitly is therefore political as well as legal. Ottawa is trying to reassure workers that new investment will not be built around imported employment practices, temporary workforces that bypass local hiring or a race to the bottom on wages and conditions. The government says Canada’s auto sector supports more than 500,000 workers, including approximately 125,000 direct manufacturing jobs, and contributes more than $16 billion a year to national GDP. For communities built around assembly and parts plants, the quality and permanence of jobs can matter as much as the number announced at a groundbreaking ceremony.
International experience explains why the issue has become a formal guardrail. In Brazil, labour authorities alleged that 163 Chinese workers employed by a contractor at a BYD factory construction site had been brought into the country irregularly and subjected to conditions that violated local law. BYD later pledged to comply with Brazilian labour requirements, while the contractor disputed the authorities’ characterization; legal proceedings and regulatory disputes followed. The Canadian condition is not a verdict on every Chinese automaker or overseas project, but it signals that Ottawa expects responsibility to extend through contractors and supply chains. In practical terms, a credible agreement would need transparent hiring, enforceable workplace protections, skills training and clear accountability for subcontractors. It would also have to win at least some confidence from Canadian unions and host communities. A factory that arrives with impressive production targets but weak local trust would struggle to deliver the durable industrial foothold Ottawa is seeking.
Canadian Parts Must Be More Than a Symbolic Add-On
Ottawa’s third condition requires Chinese EV ventures to use Canadian parts. This is the point that turns local assembly into industrial policy. Canada’s automotive economy is not built only around final assembly lines; it includes tooling companies, battery-material projects, software developers and major suppliers such as Magna, Linamar and Martinrea. The federal government says more than 60 per cent of Canadian-made auto parts and over 90 per cent of Canadian-made vehicles are exported to the United States. That deep integration has created wealth, but it has also left the industry exposed to American tariffs and policy shifts. Bringing Chinese manufacturers into Canada could diversify customers for domestic suppliers, but only if purchase orders flow to Canadian plants rather than arriving in shipping containers alongside nearly completed vehicles.
Joly has pointed to Magna’s arrangement with XPeng in Austria as one possible model. Magna began assembling two XPeng electric models at its Graz operation in 2025, giving the Chinese company localized European production and the Canadian supplier additional manufacturing work. The example demonstrates how an established contract manufacturer can help a foreign brand enter a market quickly. It also exposes the limits of assembly alone. Public announcements describe Magna as the assembler but do not identify a transfer of XPeng’s core software, battery technology or intellectual property. For Canada, a strong local-content rule would therefore need more precision than the phrase “use Canadian parts.” Ottawa would have to determine which components qualify, how much domestic value is required and whether batteries, power electronics, software, steel, aluminum and engineering services count. Without measurable thresholds, a few locally sourced seats or body panels could satisfy the optics while the highest-value systems remain imported. The condition will matter only if it creates repeat business, supplier investment and engineering knowledge that stay after the first model cycle ends.
Secure Software and Protected Data Are the New Safety Test
The fourth condition moves beyond traditional manufacturing: vehicle software must be secure and users’ data must be protected. Modern vehicles are connected computers that can collect location history, driving behaviour, contact information, entertainment choices and other personal data. They may also receive over-the-air software updates and communicate with manufacturers, mobile applications and outside service providers. Canada’s Privacy Commissioner has warned that connected-vehicle information can be transferred or stored in foreign jurisdictions, where it may become accessible under different legal and national-security regimes. Transport Canada has likewise made vehicle cybersecurity a policy priority, emphasizing risk management, safeguards, monitoring, incident response and recovery across a vehicle’s life cycle.
This requirement may be the most technically complex of the four because Ottawa has not yet publicly spelled out the compliance test for a Chinese-Canadian EV venture. A meaningful framework would have to answer practical questions: Where is Canadian driver data stored? Who can access it? Which company controls over-the-air updates? Can independent experts audit critical software? What happens when a vulnerability is discovered, and can a foreign parent company remotely disable or materially alter vehicle functions? Those questions apply to all connected automakers, not only Chinese brands, but Chinese investment attracts greater scrutiny because Canada is simultaneously weighing economic opportunity and national-security risk. Software security also connects back to ownership. A plant may be majority Canadian-owned and filled with Canadian parts while still depending on a foreign partner for code, cloud services and digital architecture. Ottawa’s final condition recognizes that the most valuable and sensitive part of a modern EV may not be stamped into metal at all. It may be the invisible system that controls the car and the information flowing through it.
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