Import restrictions are rules that make it harder or more expensive to bring cars from other countries into Canada. When these rules are loosened, it becomes easier for foreign cars to be sold here.
An automotive retail platform is a computer program that helps car stores run better. It helps with selling cars, keeping track of cars, and helping customers.
A quota system is like a limit on how many things can be brought into a country. Here, it means Canada only lets in a certain number of electric cars from China each year.
Geely is a big car company from China that owns other car brands like Volvo and Polestar. They make cars in China and sell them in other countries too.
When a car company starts selling cars in a new country, sometimes they stay for a long time, but sometimes they only sell cars for a few years and then leave.
Direct sales means the car company sells cars straight to buyers without using car dealers. This can save money but might make it harder to get service or support.
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Hi everyone and welcome to the March 20th,
2026 episode of the Automotive News Canada podcast.
I'm your host, Greg Lason, the digital and mobile editor at Automotive News Canada.
Coming to you from just outside Windsor, Ontario, the automotive capital of Canada.
Today on the show, I speak with my ANC colleague, Toronto Bureau Chief David Kennedy.
He's here to break down Canada's economic compromise with China,
which will allow China made EVs into Canada at a much reduced tariff rate.
He also tells us how many EVs are destined for Canada in each of the next few years,
which brands are on the way and how they will be priced and sold.
But first, look at some of the top Canadian automotive stories of the week.
Canada's zero emissions vehicle sales plunged nearly 40% in January.
The drop caps a full year of declines.
Just 8,826 ZEVs were sold according to new data from Statistics Canada.
That's 7.7% of all new vehicle sales.
It marks the 12th straight monthly decline.
Industry watchers point to the end of the federal incentives as the main cause.
Those rebates ran out early last year.
Provincial payouts have also been cut sharply, especially in Quebec.
A turnaround could be coming.
Ottawa introduced a new rebate in February offering up to $5,000 off qualifying electric vehicles.
Sticking with EV news for a moment,
China's cherry automobile is weighing an expansion into the Canadian market.
The automaker says it's focused on offering competitive products and building a long-term
presence in Canada.
With sales in more than 130 countries, cherry is China's top vehicle exporter.
The company says it's studying Canada closely and exploring partnerships with local stakeholders.
Industry analysts expect cherry to begin shipping electric vehicles to Canada by the end of 2026.
The move comes as Canada opens that door wider to Chinese EVs by easing those import restrictions.
China has already taken steps towards entry by trademarking several brands in Canada.
The company says it's still evaluating how it will sell vehicles to Canadian consumers.
And we end on the retail front.
A newly formed dealership group is making its first moves in Atlantic Canada.
Sigma Auto has acquired two Nova Scotia stores, Cumberland Kia in Amherst and Forbes Kia in
Bridgewater.
The company says it plans to grow by targeting smaller markets.
CEO Michael McGilvery says the strategy mirrors smaller firms that succeed where larger players
don't compete.
Sigma Auto is separate from his family century auto group which focuses on bigger urban markets.
The new group sees strong growth potential in both dealerships.
It's also betting on rising demand for the Kia brand across Atlantic Canada.
Sigma Auto says more acquisitions are planned with a focus on Atlantic Canada and possibly Ontario.
And that's a look at some of the top Canadian automotive stories of the week.
Coming up my conversation with Automotive News Canada Toronto Bureau Chief David Kennedy.
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Search Keyloop Fusion and inquire today to get started. The all-new Fusion, automotive retail
platform from Keyloop. Welcome back to the Automotive News Canada podcast. I'm your host,
Greg Lason. My guest today has spent the last two months covering the Canada-China EV deal,
going through it with a fine-tooth comb. He's got all the details and he's here to break it all down.
It's great to have Automotive News Canada Toronto Bureau Chief David Kennedy on the show.
David, thanks for joining me on the podcast. Hi, Greg. Thanks for having me.
That's great to have you on. You're here to explain the compromise between China and Canada
when it comes to Canada allowing those China-made electric vehicles into the country,
sort of lay it out for us now that the dust has settled. How is this going to work?
Right. Back in January, we had Mark Carney head over to Beijing and make the deal. It was
preliminary for six weeks, a couple of months before things got finalized. Now we have essentially
a wrapped up trade deal, so to speak here. Essentially, what it does is allow 49,000 China-made
electric vehicles into Canada under a quota system. It'll step up from there over the next few years.
But in exchange, Canada gets basically preferred tariff access to a few
trade irritants that mostly canola is the biggest product that Canada has got through
the doors in China, but also a couple others, lobster crab, peas, a few agricultural things
that we want to sell in China in exchange for cracking open the door to the Canadian car market.
So 49,000 EVs per year moving up. Do you know what sort of the step ladder looks like? We started
49,000 when and where do we end and how many is in that final year of this agreement?
Yeah. So I mean, it starts this year and the quota year doesn't quite line up with the calendar year,
but it kicks in March 1st. Each quota year runs a year from then. So it starts at 49,000 in 2026
and each year after that steps up by 6.5%. So I think that puts you into the mid-60s or so
by 2030. And all bets are off, I guess, after that. The way it's written, it reads that it's in
perpetuity, that the number will keep going up, but there's been no clarity beyond 2030 on what's
going to happen. Initially, it sounded like a certain percentage of these EVs would immediately
be required to have an import price below $35,000. That doesn't appear to be the case
at the beginning. So how does that part of this deal roll out over the next few years?
Right. So when this was announced, the federal government said 50% of the EVs would need to
have an import price of below $35,000 in 2030. And they were a bit wishy-washy about where
it would start. I think it was implied that it would start at a lower percentage and step up
from there. But with the final regulations and questions we've asked, we've got the numbers now.
So basically, there'll be nothing this year. There's no requirement on affordable EVs in 2026.
In 2027, it starts at 10%. So a pretty low bar there. Then 2028 is 20%. 2029 is 35%. And then
by 2030, we get to that 50% affordable EV threshold that Ottawa is going to be requiring.
But at the same time, it's important to note that that's an import price, not a retail price.
Global Affairs Canada tells me that there's no mechanism within the federal government to determine
how much they can mark these vehicles up once they're in the country. So they come in,
and they need a freight onboard price of $35,000. As long as they hit that threshold,
all bets are off when it gets to Canada. So let's put a couple of these numbers
into context. $49,000 to start, maybe up around mid-60s, pushing 70 at the most as we move forward
over five, six years. In context, relatively speaking, how big of a portion of the entire
market is that? And how big of a portion of EVs is that? Because you're a man on the scene every
month when it comes to ZEV registrations. I'm just wondering how does that eat away at North
American-made product or products from overseas in the complete picture of things?
Yeah. Well, it starts relatively low when it comes to Canada as a whole for car sales. It's only
2.5%, 3% in the first few years. So it's a small slice. And I don't think anybody's too worried
right off the bat. But at the same time, it will step up over time. And the bigger thing is that it
is a much larger portion of the EV sales in Canada. I don't have the percentage off the top of my head,
but I think it's somewhere a third and a half. Obviously, depending on the year, last year was
not a good year for EVs. But it's a large number and it will start to really eat away at EV sales
from other automakers, assuming that everything that is brought in is fully electric and assuming
that people want to buy them. The question that everyone wants to know, when are they going to
show up? When might we see the first China-made electric vehicle on sale for purchase in Canada?
Whether that's online or in a deal or lot, when can consumers start? When can they expect to start
buying? Yeah. Well, an important distinction here too is that we expect to see them within months,
but there's a big asterisk on that. Those are going to be the familiar players.
Back in 2024, when these tariffs were put in place on Chinese-made vehicles,
Tesla, Volvo and Polestar were the ones shipping Chinese-made vehicles into Canada. And the expectation
over the first six months or so of this is that those players will be eating up that share of the
quota. So those vehicles we can see sooner than later, but there'll be no real surprises. Those
vehicles are already on the road in Canada anyway. It's towards later into 2026. And realistically,
my expectation is that it will probably be 2027, but late 2026 at the very earliest is when we
actually start to see some homegrown Chinese brands enter the country. And we know that
three automakers essentially are the ones that are likely to get into the market first, and that's
BYD. No surprises there. Cherry, which is the largest exporter of Chinese vehicles actually.
They've topped BYD for a year or two. And Geely, which is the parent of Polestar and Volvo and a
number of Chinese brands. But unlike the Swedish connection on Polestar and Volvos, they've got
a lot of Chinese homegrown brands as well that we may see here. Do you see any beyond that over
the next five years, or does it stop with those three, which we know have sub-brands? You wrote a
story not too long ago about one of those kind. I think it was Cherry, trademarking some of their
other sub-brands. Do you see anyone beyond those big three players? And they are essentially the
biggest three players out of China. But are there more brands on the way after that? Do you expect?
Yeah. I mean, and what we're told by those in the industry is that, yes, expect some more to
arrive. These guys are going to be the first. They're the most sophisticated to export overseas.
And in BYD's case anyway, they were already looking at Canada before this tariff was put in place.
They were planning on it already. But we're told that it may be anywhere between 15 and 20
different automakers might be looking at Canada. And the number of brands could go up from there
as well because it's not necessarily one brand per automaker. But we could see 20, 25 new brands
in Canada. Analysts say not all of them might live. They might sell some vehicles here. They
might establish a footprint for five years, but not make it. So it might not be permanent,
but we're going to see some serious shaking up in the market and some unfamiliar players enter it.
The other aspect of it is that a lot of analysts look to Australia, which has got this underway
five years ago, that they opened up their market a little bit more. Chinese brands started to enter
and five years down the road, they're right at that 20 or so additional brands selling in the
country. I think last year was mid-70s or so of number of brands that were selling in Australia.
And I mean, that's quite a leap from what we've got at Canada.
So the question then is, how will they be sold? How will they be marketed in Canada? Are they
strictly online? Is that how it's happening in Australia? Will there be a dealership network?
You and I have both received emails and calls from dealers who say,
I want to sell Chinese brands. Can you put me in touch? But what is the sense you get after
talking to those in the industry? Will they be sold online or will they have dealer networks
in Canada or a combo of both? Well, on this, we've got good news probably for dealers is that
they're probably not going to get cut out of this equation is the reality. We know BYD tried to do
this in a number of other markets. They tried to go direct sales, thought they knew the market.
It turned out they were a little overconfident in what they thought they could achieve.
And they ended up falling back on dealers to make the sales, to service the vehicles.
So the expectation going forward for BYD, Cherry and Julie is that they'll be setting up
dealer networks here in Canada. What that looks like might depend a little bit,
automaker to automaker. There might be some greater involvements, whether or not some
sort of agency model aspect or things like that, depending on the brand. But dealers are definitely
going to be part of the equation. And essentially every auto maker case is what we're told. And
I think you talked to dealers as well that these conversations have at least got started already
here in Canada. There's dealers talking to these brands. Some very interested in representing them.
Others kind of taking more of a wait and see approach. But with six, nine months to go before
we potentially start seeing these vehicles, things are going to happen pretty quickly.
What are dealers saying? Are they on board? Are they excited? Is there a lack of dealers?
Too many dealers? Can you gauge the interest for us?
Yeah, it's a complete mixed bag. Essentially, it's going to vary dealer to dealer, but
some are really, really interested going out of their way. As you said, emailing us, for instance,
about how to get in contact with BYD China and things like that. They're obviously really
interested in what these brands want to add to their portfolio. And others just aren't.
I think some are probably happy with what they have. Some just a little bit more focused on
what's familiar, what's North American. And it also varies by size of the group. Essentially,
what I'm told is that most midsize dealer groups or small to midsize groups are very interested
in this because it's hard to get a Mercedes store. It's hard to get a BMW store, a Toyota store.
They're not really making any more of them, so to speak. And it's hard to get through that door
if you don't already have one. So all those guys are typically interested. The larger end of the
scale varies though, because these are the big players. You've got the 35, 40 plus stores.
There aren't that many of these guys, but at the same time, some are gung-ho. They want to be
involved. They want to get in on the ground floor. Others are being a little bit more risk-averse,
I guess I would say, and taking their time mapping things out and letting somebody else
be the test balloon here. We've heard from Uniform who says this is a bad idea. We've heard from
Premier Doug Ford in Ontario who says this is a bad idea. They are concerned about many things.
And I've written about the security issue and you've written about the sales issue and the
manufacturing issue. What are automakers saying? Not Chinese automakers, but what has the reaction
been in North America by those who manufacture vehicles, particularly in Ontario? Are they
on board with this? Are they dead set against it the way the Premier is and the way Uniform is?
What's their reaction been? I would say they generally have been quiet. Nobody's going to
come out swinging against this necessarily, at least not in so many words, I think, because
it's understood that the expectation here is competition and it's hard to be against it fully.
But what I would say is that the automakers have kind of voiced their concerns about
competing on a level playing field. It's well understood that there is some subsidy level,
some state sponsorship involved in an awful lot of these Chinese automakers that are
making headway globally and about to make headway in Canada. So that's really what the focus is.
It's not a full bore effort to say do not come, keep them out. It's more make sure that what we
have here is fair to compete with the new players that might be coming. David, great to have you on
and clear the air. It has been a long tumultuous two months about this and I think things have
settled and you outlined it clearly and concisely. Of course, I appreciate it. Thanks for having me.
I'd like to thank David for his time. If you'd like to be a guest on the show, have a suggestion
or simply want to comment, email me at glasen at AutoNews.com. And remember, you can listen to
all our previous podcasts on Spotify, iTunes, Google Play or on our website, automotivenews.ca.
Just scroll to the podcast hub in the middle of the homepage and don't forget you can follow
Automotive News Canada on X where we're at AutoNews Canada. You can find me there too under
at G-Lacin, A-N-C. And finally, look for us on LinkedIn. Just search Automotive News Canada.
That does it for this episode of the Automotive News Canada podcast. We hope you'll join us next
time. So long, everybody.
About this episode
David Kennedy breaks down Canada's new trade deal allowing Chinese-made EVs into the country with a quota starting at 49,000 vehicles in 2026, increasing annually. The episode explores how this impacts the Canadian EV market, pricing thresholds for affordable EVs, and which Chinese brands like BYD, Cherry, and Geely are expected to enter. It also covers dealer interest in representing these brands and the cautious stance of North American automakers. The discussion highlights the evolving competitive landscape and potential market shakeup as Canada opens its doors wider to Chinese EV imports.
EV sales slide; Chery eyes Canada; Sigma expansion. Plus, Automotive News Canada Toronto Bureau Chief David Kennedy explains in detail the Canada-China compromise that sees more China-made EVs on the way to Canada. He also explains the quota limits, who might sell them, and at what cost.
