Canada-China EV Trade Deal: What it Means for TSLA, GM, Geely & BYD

Canada is easing tariffs on Chinese-made electric vehicles (EVs), marking a major shift in its EV trade policy. Under a new deal with China, Canada will allow up to 49,000 China EVs per year to enter the country at a 6.1% tariff, replacing the 100% duty imposed in 2024. That quota could rise to 70,000 vehicles over the next five years, according to Prime Minister Mark Carney. The deal also includes a price-based clause, with half of the annual quota reserved for EVs priced under CAD 35,000, signaling a clear focus on boosting access to lower-cost electric vehicles.

The original tariffs were introduced in tandem with the United States, as both countries argued that China was overproducing EVs and distorting global competition through state support. In exchange for easing EV tariffs, China will lower retaliatory duties on key Canadian agricultural products, signaling a broader effort to ease bilateral trade tensions.

China currently accounts for roughly 70% of global EV production, and its vehicles are among the most affordable and energy-efficient in the world. Allowing Chinese EVs back into Canada is expected to lower prices for consumers and accelerate EV adoption.

The policy shift carries distinct implications for major players, including Tesla TSLA, Geely Automobile Holdings GELHY, General Motors GM and BYD Co Ltd BYDDY.

Tesla and BYD carry a Zacks Rank #4 (Sell) each, Geely is #3 Ranked (Hold), while General Motors sports a Zacks Rank #1 (Strong Buy) currently. You can view the full list of today’s Zacks Rank #1 stocks here. 

Tesla: The Early Winner

Tesla appears best positioned to benefit in the near term. While the deal is framed as opening the door to Chinese automakers, Tesla already produces a large number of vehicles in China. Tesla had already laid the groundwork in 2023 by configuring its Shanghai Gigafactory to build a Canada-specific Model Y. It began exporting the vehicle that year, driving a 460% year-over-year surge in China-built auto imports through Vancouver. But in 2024, 100% tariff was imposed, forcing the company to shift supply to its U.S. and Berlin factories. With tariffs now sharply reduced, Tesla could resume China-to-Canada exports.

The company also has a major advantage in infrastructure. Per Teslarati, Tesla operates 39 stores across Canada, giving it an established sales, service and delivery network. With a limited lineup and highly flexible production system, Tesla can redirect supply between markets faster than most rivals.

While Tesla’s models are priced above the CAD 35,000 cap that applies to half of the quota, its existing presence means it could capture early demand before new entrants are ready.

Geely: Volvo and Polestar to Regain Momentum

Geely-controlled brands Volvo and Polestar also stand to benefit. Both companies had paused imports of Chinese-built models, including the Volvo EX30 and Polestar 2, after tariffs were imposed in 2024. The new agreement makes those imports economically viable again. Volvo and Polestar already have brand recognition, regulatory familiarity and dealer networks in Canada. That puts them in a strong position to reintroduce Chinese-produced vehicles in Canada.

GM: Largely Left on the Sidelines

General Motors is unlikely to see any upside from the revised tariff framework. Although the company sells a large number of EVs in China through its joint ventures, those models are not approved for sale in Canada or the United States.

GM’s China EVs under the Wuling and Baojun brands were built specifically for the local market, prioritizing low cost over North American safety and regulatory requirements. Models such as the Wuling MINI EV would require extensive redesign to meet Canadian standards, making a quick market entry unrealistic.

Per GMAuthority, even GM-branded electric models (including the Chevy Spark EV, Chevy Captiva EV, Chevy Express MAX EV) currently sold in Mexico and parts of South America would need significant engineering changes and new crash testing before they could be sold in Canada. The added time and expense would likely offset any benefit from lower tariffs, leaving General Motors unable to capitalize on the new trade arrangement.

BYD: Opportunity Is There But No Immediate Benefit

BYD fits within the deal scope but is unlikely to benefit in the near term. The deal reserves half of the import quota for EVs priced below CAD 35,000, which aligns well with BYD’s cost-focused manufacturing and competitive pricing.

However, BYD does not yet have a passenger vehicle sales presence in Canada. Its vehicles will need certification from Transport Canada, and the company must build out distribution, marketing, and service networks. These steps take time.

That said, BYD already operates an electric bus assembly plant in Ontario, giving it a local footprint that could support future expansion. Reduced tariffs lower the cost barrier, making Canada an attractive market for BYD over the medium term, as demand for affordable EVs grows.

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