First Chinese Electric Vehicles Arrive in Canada Amid Policy Changes and Security Debate

The Canadian electric vehicle (EV) market has begun to see the arrival of Chinese-made EVs, with Lotus, owned by the Chinese Geely Group, shipping its first Eletre SUVs to Canada. This development follows a bilateral agreement reached in January between Prime Minister Mark Carney and Chinese President Xi Jinping, which permits up to 49,000 Chinese EVs to enter Canada annually at a 6.1 per cent tariff rate. The change reversed a 100 per cent tariff on Chinese-made EVs that had been implemented in 2024. In reciprocal terms, China agreed to drop duties on Canadian agricultural products.

The Lotus Eletre, manufactured in Wuhan, China, is the first Chinese-owned and built EV available for sale in the Canadian market. The vehicle, positioned in the premium SUV segment, starts at $119,000, with fully loaded models priced at $159,000. Max Trantini, CEO of Lotus Cars Americas, reported that demand for the vehicle has been high, with the first shipment of nearly 20 cars arriving and additional deliveries expected. Trantini stated, "The Canadian customer really liked the car, and there is a high request for this car even before they saw the car... Now that we finally see the car at the dealership and also on the street, our customer will really start loving it even more."

The Eletre features a range exceeding 600 kilometres per charge and can be charged from 20 to 80 per cent in less than 20 minutes. Following its European launch three years ago, Lotus initially planned to introduce the Eletre to the Canadian market prior to the imposition of the 100 per cent tariff in 2024. However, the tariff caused a delay in imports. Trantini indicated that the company considered the Canadian market well suited for the Eletre.

According to Global Affairs Canada, a total of 2,910 EVs from China have been imported since March 1, although the agency was not able to specify their distribution or the importing companies. No new Chinese-made EVs have arrived since the end of May. Tim Dimopoulos, managing director and publisher of Automotive News Canada, suggested that established brands with existing dealerships, such as Lotus, Tesla, and Volvo, will likely account for much of the initial 49,000-unit import volume. Dimopoulos expects new entrants, such as BYD, to begin appearing in the Canadian market in the near future.

Currently, Lotus maintains six dealerships across Canada and is considering expansion in response to heightened interest in the Eletre. Trantini noted, "Our dealer network… it was quite small, and that was the right size for the car we were selling until today because we were selling a sports car. Now that we have this new car coming, we are already talking with our dealer in order to expand their business, and I'm also receiving daily requests from investors that want to join."

In addition to Lotus, other Geely-owned brands are positioned to enter the Canadian market. Transport Canada data shows that Polestar, also under the Geely Group, is listed in Transport Canada’s Appendix G pre-clearance program, allowing for the import of new passenger cars produced in Chengdu and Taizhou, China, as well as vehicles manufactured in the United States and South Korea. Chinese automakers BYD and Chery are also expected to enter Canada in the coming months. BYD has Appendix G approval for an as-yet unspecified passenger vehicle manufactured in Shenzhen City and Xi’An, China.

Dimopoulos anticipates that new entrants will initially focus on high-end luxury models, which typically yield higher profit margins and appeal to niche buyers. "If they're going to invest in dealer networks or partnerships with existing networks, or even set up offices here, they need to make some money initially to do that, and the more expensive stuff will allow them to do that," he said.

However, Canadian policy targets broader affordability. Ottawa has set a goal that by 2030, half of Chinese-imported EVs in Canada should be priced under $35,000. Experts predict that as more Chinese EVs, particularly lower-cost models, enter the market, overall EV prices—including those from other manufacturers—will decrease. Dimopoulos commented, "Overall it should bring prices down from other manufacturers. That's going to be the first kind of pressure you'll see in the marketplace."

Transport Canada reports that there are at least 726,126 light-duty battery EVs on Canadian roads, representing 2.7 per cent of the market share, with an additional 304,823 light-duty plug-in hybrid vehicles comprising 1.1 per cent of the market.

The entry of Chinese-made vehicles has also prompted debate over national security and privacy. Intelligence and cybersecurity experts have expressed concerns, describing EVs as "smartphones on wheels" and highlighting Chinese laws that require companies—particularly those with state ownership—to provide data to the Chinese government upon request. Jody Thomas, former National Security and Intelligence Advisor to the prime minister, stated, "It doesn't mean they will access the data, but it means they can, should they choose to. The risk at this point is more a plausible risk." She outlined types of data potentially at risk, including driving routes, cell phone contacts, driving patterns, phone conversations, and recordings from car cameras. Thomas said, "At sort of the base level, it's a privacy issue, but broader than that, it becomes a potential for espionage when you aggregate the data, when you look at it as more than just the individual driver."

Thomas suggested that individuals should consider these risks when purchasing Chinese-made EVs, particularly those working in sensitive sectors. "If you work in the military, if you work in sensitive sectors, if you're an employee of some elements of the federal government, provincial governments, sensitive industries, you perhaps are not going to want to buy one of these vehicles," she stated. Some security experts have proposed that the federal government consider banning Chinese-made EVs from sensitive sites such as military bases and certain government facilities.

In response to these concerns, Trantini asserted that Lotus vehicles comply with all federal rules and regulations. "Our cars are fully certified and all our hardware and our software follow the rules," he said. "We disclosed to the government everything that is related to our software, everything related on our hardware, and we pass all the examinations, so as long as we are compliant, I don't think we have anything to fear."

Public Safety Minister Gary Anandasangaree, when asked about potential risks, stated before a parliamentary committee that the government must ensure that vehicles in Canada do not have the capacity to transmit information outside the country, including to China.

Canadian officials, including Industry Minister Melanie Joly, have reiterated that Chinese automakers present in the Canadian market are expected to partner with Canadian firms both to manufacture and sell vehicles domestically. Experts have indicated that Canada could negotiate provisions restricting Chinese companies from collecting domestic data if they manufacture EVs in Canada.

Trantini confirmed that Lotus will comply with any future government regulations regarding data and security, stating, "We will adjust and always be compliant."

The arrival of Chinese-made EVs in Canada marks a significant development in the automotive sector, intersecting market expansion, pricing strategies, trade policy, and national security considerations. Observers will be monitoring how these factors influence the broader EV landscape in the coming years.