Is Canada Considering EV Production Partnerships With China?

A Policy Shift Toward Joint Manufacturing

Canada is weighing an approach that would have seemed unlikely in recent years: assembling electric vehicles domestically in collaboration with Chinese automakers. Rather than focusing solely on importing finished cars, the proposal centers on building vehicles in Canada using local suppliers, then shipping them to international markets.

The concept was outlined by Industry Minister Mélanie Joly, who suggested that Canadian parts manufacturers could work alongside Chinese EV brands in a joint venture structure. According to her remarks in an interview with Bloomberg News, established suppliers such as Magna International, Linamar, and Martinrea already maintain operations in China and could leverage that experience in a Canadian-based production project.

Joly argued that combining Canadian manufacturing capacity with Chinese electric vehicle expertise could result in a product competitive beyond North America.

Leveraging Canada’s Supplier Base

Canada’s automotive sector includes several globally recognized component producers. Companies like Magna and Linamar operate extensive international networks, including facilities across Asia. This existing footprint could reduce the friction typically associated with cross-border industrial partnerships.

Under the scenario being discussed, these firms would participate in assembling EVs within Canada. The vehicles would be co-developed and branded in a way that reflects collaboration between the two countries, then exported to overseas markets.

The minister maintained that higher wages in Canada do not automatically eliminate competitiveness. As an example, she referenced Honda’s long-standing production of the Civic in Ontario, where the model remains price-accessible despite being built in a higher-cost environment. Her position suggests that efficient design, supply chain integration, and scale could offset labor differences.

From Tariffs to Talks

The discussion marks a noticeable change in tone. Only months ago, Canada aligned with the United States by imposing a 100% tariff on electric vehicles imported from China. That move was widely viewed as a measure to protect domestic production and mirror U.S. trade policy.

Since then, tensions affecting North American automotive cooperation have complicated matters. Investment plans from traditional automakers have slowed, and cross-border coordination has faced political strain. In that context, Ottawa appears to be reconsidering whether relying heavily on the U.S. market leaves Canada exposed to policy swings beyond its control.

The reconsideration of import duties and the openness to industrial cooperation signal a recalibration rather than a wholesale abandonment of trade safeguards. Still, the shift illustrates how quickly industrial strategy can evolve in response to global competition.

Global Competition Reshaping Strategy

The broader electric vehicle market has increasingly been influenced by manufacturers based in China and other parts of Asia. Companies such as BYD have expanded rapidly, gaining scale advantages and cost efficiencies that Western producers have struggled to match.

For Canada, the challenge is multi-layered. The country faces tariff pressures from the United States, uncertain commitments from legacy automakers, and intensifying global competition. Depending entirely on American partnerships now appears risky, especially in an industry undergoing technological transition.

By exploring a production alliance with Chinese firms, Canada may be seeking to diversify its industrial relationships. Rather than choosing between Washington and Beijing, policymakers could be attempting to position the country as a manufacturing bridge that draws on strengths from both sides.

Economic and Political Trade-Offs

Any Canadian-Chinese EV assembled domestically would need to meet two tests: economic viability and public acceptance. On the economic side, success would hinge on controlling costs while maintaining quality standards. Export markets would also need to remain open to vehicles developed through such partnerships.

Politically, the optics are more complex. Trade tensions, national security considerations, and industrial policy debates all influence public perception. Even if a joint venture proves commercially attractive, it would likely face scrutiny from policymakers and industry stakeholders.

Nevertheless, the fact that federal officials are publicly discussing this possibility indicates how fluid the automotive landscape has become. The electric vehicle transition is altering supply chains, alliances, and long-standing assumptions about where and how cars are built.

A Sign of Broader Realignment

Canada’s willingness to consider domestic EV production with Chinese participation underscores a larger transformation within the global auto industry. As electrification accelerates and competitive pressures intensify, governments are reassessing strategies that once seemed fixed.

Whether such a partnership ultimately materializes remains uncertain. What is clear, however, is that Canada is exploring options beyond traditional North American frameworks. In a rapidly shifting market, diversification may be seen less as a gamble and more as a necessity.

Recommend Reading: Canada Cuts Tariffs on Chinese EVs, Splitting North America’s Auto Strategy