How Canada can have 100% of new car sales be electric in 2035
Canada needs to keep EV targets and modestly reduce tariffs on low-cost Chinese EVs to reach them.
The Canadian branch plants of American auto firms are mad.
They are mad because Canada’s Electric Vehicle (EV) Availability Standard, which was finalized in late 2023, requires that at least 20 per cent of new vehicle sales in Canada be zero emission by 2026. Furthermore, the target increases each year until 2035 when 100% of passenger cars sold in Canada are to be electric. And they are mad not only because they think these goals are unattainable, they think they are undesirable in and of themselves.
Now, it’s entirely possible that the branch plants are right and Canada will not meet the 20% goal set for 2026. So far in 2025 there has been a drop in EV sales with Q1 sales just 9.7 per cent — down from 18.9 per cent in Q4 2024, according to new sales data from S&P Global. But that doesn’t mean that the Standard should be abandoned nor that the goal of having 100% of new car sales be electric in 2035 is unattainable. What it means is that because affordability is the greatest obstacle to meeting the Standard’s ambitious goals, there will need to be a significant increase in the number of lower-cost EVs on Canadian roads. And at least for the foreseeable future, the only source of the low-cost EVs we need to hit our targets, are Chinese EV manufacturers.
Let’s do a deep dive into the world of EVs and unpack what needs to be done to have 100% of all new auto sales be EVs in 2025.
In 2024, Chinese companies were responsible for a staggering 76% of all EV sales globally. This figure reflects not just domestic sales within China, but also the international reach of Chinese EV manufacturers like BYD (Build Your Dreams), SAIC, and others.
BYD is currently the world's largest EV manufacturer having surpassed Tesla in 2024. The most affordable BYD electric vehicle in 2025 is the BYD Seagull EV, priced at approximately $15,960. As of mid-2025, the BYD Seagull is not officially sold in Canada, despite its popularity and ultra-low price in China and other markets. In contrast, the most affordable Tesla currently available in Canada is the 2025 Tesla Model 3 Rear-Wheel Drive (RWD), with a starting price of approximately $59,990.
Why are there so few low-cost Chinese EVs in Canada? 100% tariffs on Chinese EVs, that’s why. Canada officially announced its 100% tariff on Chinese-made electric vehicles in August 2024, with the surtax taking effect on October 1 of that year.
Canadian automakers and Unifor argued that Chinese EVs—often priced far lower due to state subsidies—posed a threat to the nascent Canadian EV manufacturing sector. Perhaps more importantly, Canada was following the lead of the United States, which imposed similar tariffs of 100% in September 2024, to counter what it called China’s “unfair advantage” in the global EV trade. And this was pre-Trump!
To be clear, some level of tariffs on Chinese EVs are justified. The European Union has imposed significant tariffs on Chinese-made electric vehicles to shield its domestic EV industry from what it (correctly) views as unfair competition. The latest round of EU tariffs on Chinese EVs took effect on October 30, 2024, following a nearly year-long anti-subsidy investigation by the European Commission. This brought the effective EU tariff to as high as 45% on some Chinese EV models. Still, as of June 2025, Chinese automakers, led by BYD, accounted for 10.6% of all EV registrations across the EU. But 45% tariffs (and on most Chinese EV models, the EU tariffs are lower) are not 100% tariffs and 10.6% of the market is not 0% of the market. The EU is getting tariffs on Chinese EVs pretty much right and Canada should take note.
Another factor leading to the 2025 decline in EV sales in Canada was the fact that the federal government’s iZEV program, which offered up to $5,000 for eligible zero-emission vehicles, was paused on January 12, 2025. Ottawa has promised to reinstate the program, but no restart date has been announced.
The provinces, BC excepted, have also cut back on their EV incentives in 2025. BC still leads the pack in EV sales with 19% of the overall auto market, Quebec has roughly 15% and Ontario a paltry 7%. Sales in all provinces are significantly down from 2024 when richer incentives were in place.
Not all EV manufacturing by Chinese companies is done in China. As a result of American and Canadian 100% tariffs (and, of course, low wages), Mexico has become the hub for Chinese EV manufacturing in North America. As of this writing, at least three Chinese EV companies have established assembly plants in Mexico, with several more planning to follow including the global giant, BVD.
It would be a shame if Canada missed out on the opportunity to be part of the Chinese EV supply chain. Just because the Trump administration opposes Chinese EVs, it doesn’t mean that Canada has to. Canada is an attractive market with a skilled work force, lots of clean electricity, and abundant critical minerals. Smart policy would build on these strengths to attract Chinese EV companies to build here, not just sell here. That’s the kind of bargain Canada struck with other EV manufacturers such as Honda and Volkswagen. To succeed, we must continue to diversify our EV manufacturing supply chain by building relationships with regions leading in EV production and innovation.
Canada’s American-owned auto industry may oppose the EV mandate and support high tariffs that restrict Chinese-made EVs, but these positions are not necessarily in the Canadian interest. It denies Canadians access to affordable EVs, which cost less to fuel and maintain than gas vehicles, and that are already available in other markets.
The global transition to EVs is accelerating. Analysts at the International Energy Agency and BloombergNEF project that EVs will make up more than half of global passenger cars sales by 2035. EVs are the future, and countries that adapt will prosper.
Canada needs to build a domestic EV supply chain, boost affordability and attract global investment. This isn’t an easy path, but it’s the one that Canada should take.
In the short-run, this path means keeping the EV mandate, reducing (not eliminating) the 100% tariffs on Chinese-made EVs and building out the charging infrastructure. Longer-term, it means having a Chinese EV maker (or two) set up shop in Canada.
When the Liberals announced their “All-in-Canada” auto plan during the spring campaign, they were strangely silent on the EV mandate. This was almost certainly because the American auto companies operating in Canada opposed it.
Canada must be bold. The future is electric - let’s get to it!