BYD preparing to enter Canadian EV market, documents show

BYD is preparing to enter the Canadian auto market in a move likely to drastically change the complexion of the North American electric-vehicle segment but also attract government scrutiny, as trade officials in Ottawa weigh tariffs on EVs imported from China. 

Public documents filed with Ottawa in late July show lobbyists acting on behalf of BYD registered with the federal and Ontario governments to “advise on matters related to the expected market entry of BYD into Canada for the sale of passenger electric vehicles, and the establishment of a new business, and the application of tariffs on EVs.”

The company’s timing or method for launching Canadian sales was not immediately clear, but an auto industry source said BYD has recently met with Canadian dealers about establishing local dealerships.

BYD did not immediately respond to multiple requests for comment about the prospective Canadian rollout, the possibility of manufacturing in Canada or how it plans to navigate possible EV-import tariffs currently being considered by Ottawa. 

The company, which overtook Tesla as the world’s top-selling EV maker at the tail end of 2023, would become the first of China’s major homegrown automakers to launch passenger EV sales in Canada. 

Meanwhile, BYD has already established a presence in Mexico, where early this year, it delivered the first of its 100 Yuan Plus compact crossovers. It also chose Mexico City for its global reveal of the BYD Shark in July and is planning a factory to build the plug-in hybrid pickup in central Mexico that will create more than 1,000 jobs, according to the company. 

BYD also operates in a range of global markets in Asia, Europe and South America, though notably not in the U.S., which recently promised import tariffs on China-made EVs to 102.5 percent from 27.5 percent previously. 

In February, Stella Li, executive vice president of BYD and CEO of BYD Americas said the company is “not planning” to enter the U.S. She pointed to growing political pushback on Chinese companies and the country’s slowing rate of growth for EV adoption as the rationale.

As with the U.S., the European Union imposed provisional import tariffs of 17.4 percent on BYD vehicles in July, citing unfair state backing, most notably for access to subsidized battery materials. 

Canada is currently in the final days of conducting its own review of Chinese state support for automakers that could lead to tariffs. Federal trade and finance officials began 30 days of consultations on July 2. 

Flavio Volpe, president of the Automotive Parts Manufacturers Association (APMA), was one of the first to sound the alarm over the threat of state-backed affordable EVs undermining North American manufacturing. 

According to Volpe, China’s share of Mexico EV imports rose to 19.7 percent from 5.4 percent between 2022 and 2023. During a roundtable discussion July 25, he called the surge “very dramatic." 

Volpe said China is using what he calls a “tactical deployment” of cheap EVs. “They play in the market and see how quickly they can get in.” 

While North American automakers “operate in the same way,” the difference is that most of the players from China are “state-owned and centrally planned,” he said. “It’s not an even playing field and we need to address it.”

Canada must follow suit with other leading economies on tariffs to protect both its domestic auto market and that of the U.S., where 80 percent of vehicles made in Canada are shipped, Volpe said. 

“We’ll be displacing American market share if we don’t,” he said. “Believing the Chinese will operate in good faith in this space is naive.”

Joe McCabe, CEO of AutoForecast Solutions, said the U.S. auto market is BYD’s “holy grail,” but the company is likely to use both Canada and Mexico as “ports of entry.” 

Following the recent introduction of BYD electric buses in Canada — through which the company is “slowing trying to dilute any anti-Chinese sentiment” — it will be ready to move into the heart of the auto market, McCabe told Automotive News Canada. 

“The next strategic step is to introduce passenger cars. The goal of any Chinese-branded vehicle manufacturer entering a new market is to develop market share, which is more important in the short-term than profitability.”

Tariffs, meantime, “are just a hurdle and not a barrier to entry,” he added. 

Despite the recent strengthening of trade barriers, concerns about cheap China-made EVs have been rising among North American and global automakers over the past two years. 

Among others, Marin Gjaja, COO of Ford Motor Co.’s EV unit Model e, flagged the risk of Chinese EV imports as a “colossal strategic threat” this February. Company CEO Jim Farley has given similar warnings about BYD and other Chinese automakers, particularly the quality of their technology. 

But while BYD’s product is “phenomenal,” incumbent automakers “don’t need to be worried,” said Samir Akhavan, managing partner of Toronto dealership buy-sell advisory Templeton Marsh. 

“They will probably sell every car that they bring in, or every SUV, but how many are they going to bring in?”

With limited infrastructure and exposure to start, Akhavan said BYD volumes are likely to remain low for at least the short term. 

“Their challenge is going to be selling hundreds and hundreds and hundreds of these every month.”