China is testing whether the prospect of big EV investment could sway Canada’s trade policies.
The country’s ambassador to Canada, Wang Di, has done a blitz of interviews over the past week, including one with The Globe and Mail suggesting that EV giant BYD “carefully thought about coming to Canada,” but its investment plan was met with “huge difficulties, restrictions and obstruction,” prompting the company to successfully invest elsewhere. But a closed door can always reopen. Wang spoke of the benefits of a future investment by BYD in Canada, saying EVs are an area where the two countries could co-operate.
The prospect of a fresh foreign direct investment from a high-tech firm is hard to turn down at the best of times, and more so when the White House is openly pressuring other auto companies to divest from Canada.
With the prospect of U.S. tariffs driving up prices of other cars, BYD’s affordable vehicles may seem all the more attractive to a segment of Canadian car buyers. But others are skeptical. Even reeling in a big fish like BYD, they say, won’t address the issues limiting trade between China and Canada.
Why BYD could answer a big, yearning desire: The Chinese EV company has been on a winning streak, surpassing Tesla in sales and releasing new technology it claims can charge a car in five minutes. The company’s cheapest EV, the Seagull, sells for under US$10,000 in China, but here the EV would face a 100 per cent tariff.
Why Canada resisted BYD: Canada has given three reasons for making it harder for BYD to invest and sell here: national security concerns; protecting domestic auto plants; and solidarity with the U.S. Former president Joe Biden’s administration raised fears that China’s auto manufacturing and retail industries could use Canada as a side door to the U.S. market.
About that last thing: U.S. President Donald Trump threatens to decouple U.S.-Canada auto trade anyway. If Trump bricks over the “door” between the Canadian and U.S. auto sectors, some would argue, it no longer makes sense to deny Canadians cheaper EVs for the sake of protecting the U.S. trade relationship.
So trade policy with China is something the next prime minister will have to grapple with, and one issue provinces are already debating, said Rachel Doran, vice-president of policy and strategy at Clean Energy Canada. Affordable EVs that plug into domestic electricity grids could help protect Canadians from the volatile oil market, she noted. Her organization has urged Canada to follow the European Union, which has a formula to determine tariffs for each Chinese vehicle, rather than the blunt, U.S. approach of 100 per cent tariffs.
Future of domestic industry: At the same time, Canada has invested heavily in domestic EV manufacturing, and must continue to support those investments, said Hongyu Xiao, senior research analyst at the Pembina Institute. Tariffs can temporarily shield EV makers and autoworkers from aggressive competitors, Xiao added, but the ultimate goal should be for Canadian manufacturers to go head-to-head with global rivals. They’ll have to, Xiao noted, if they aim to export Canadian-made cars to new markets in Europe and Asia, where Chinese cars are already gaining a following.
National security concerns remain: Margaret McCuaig-Johnston, a senior fellow at the University of Ottawa, has opposed Chinese EV sales and investments in Canada, despite fostering trade ties to China in her years as a public servant, most recently with the Natural Sciences and Engineering Research Council. She has seen growing issues with Chinese tech firms taking control and intellectual property from Canadian partners, and worries that vehicle software could be used for surveillance. Not to mention the documented use of forced labour in China, and complaints about the country’s treatment of Canadian prisoners.
While Canada’s trade relations with the U.S. have changed, those issues have not, noted McCuaig-Johnston. As for trade, Beijing could easily reassure Western countries by changing key passages in its national security laws, she said. Among them: a provision requiring all Chinese citizens and organizations to assist national intelligence efforts, which she worries could force Canada-based employees of Chinese companies to remit data to Chinese authorities.
One more thing: Canada hasn’t entirely driven BYD away, since BYD buses were sold to transit operators across Canada. Stephen Sang, regional sales manager at BYD North America, said that the firm maintains a Canadian entity based in Markham, Ont., after its lease ended in nearby Newmarket on its bus assembly plant.
However, spokesperson Frank Girardot said the company is no longer planning any active manufacturing in Canada beyond servicing its vehicles. Girardot’s comments to The Logic came after company chair Wang Chuanfu told analysts this week that the company’s expansion plans do not currently include exports to Canada amid trade tensions.
Editor’s note: This story has been updated to clarify comments from Sang and add comments from BYD spokesperson Frank Girardot and chair Wang Chuanfu.
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