Ottawa’s electric vehicle (EV) mandate has given rise to speculation that Canada won’t meet its targets without bringing in Chinese automakers like BYD, which describes itself as “the biggest car brand you’ve never heard of.”
But doing so could compound problems the industry already has with Ottawa paying incentives for buying made-in-China Teslas. In addition, there are potential security concerns that the United States has taken steps to avoid, according to an expert.
BYD’s potential for growth, especially given its most compelling selling point—cheap EVs, at roughly half the price of a comparable Tesla—would add to over-reliance on Chinese-manufactured products and be a security risk, says Heather Exner-Pirot, director of energy, natural resources, and environment at Macdonald-Laurier Institute.
“We need to import Chinese-made EVs if we’re going to meet their [Ottawa’s] EV mandate. So for me, from a security perspective, that’s obviously a risk,” Ms. Exner-Pirot told The Epoch Times on Jan. 9.
Ottawa announced its EV Availability Standard on Dec. 19, which it says will ensure Canada achieves its goal of having all new cars sold in the country be zero-emission by 2035. Environment and Climate Change Canada (ECCC) Minister Steven Guilbeault thus plans to increase the supply of zero-emission vehicles (ZEVs) available to Canadians.
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But these incentives are fuelling the imports of Chinese-made Teslas to Canada and are coming at the expense of companies that actually make cars in Canada with Canadian parts and materials, said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association in a Dec. 19 post on X.
According to Statistics Canada, the value of EV imports from China has surged from $66.1 million to $1.8 billion for the period from January to October 2023 compared with that of the prior year. The imports are completed EVs and not parts to be used to manufacture them in Canada.
“If it comes in from China, then we got the stuff that we need,” Mr. Volpe told BNN Bloomberg on Jan. 2. “The problem is that’s not good for the health of one of the biggest drivers of the Canadian economy and I think we’re trying to re educate them [Ottawa] about what is needed to address these realities.”
BYD’s Rise and Prospects for Canada
At the end of 2023, BYD, or “build your dreams,” overtook Tesla as the world’s most popular electric vehicle (EV) maker. This is a meteoric rise for the company that only began stepping up international expansion in 2021. And it became No. 1 without selling EVs in the United States or Canada.Ms. Exner-Pirot noted that the United States is proactively limiting imports of Chinese goods in favour of domestic production.
“I think we’d do well to do the same thing with EVs, and so I do see that we are actively pushing toward an energy transition that relies more heavily on Chinese-manufactured goods,” Ms. Exner-Pirot said, referring to solar panels, wind turbines, transmission lines, and the processing of critical minerals.
She added that she’s not saying all Chinese imports should be banned.
“But I do think we should be mindful of how dependent we want to be on Chinese critical minerals, Chinese processing, and Chinese manufacture. And I don’t think that’s coming into the equation with the government.”
BYD is currently focused on electric buses, trucks, and other heavy equipment in the United States and Canada. It opened a bus assembly plant in Newmarket, Ontario, in 2019, and the Toronto Transit Commission rolled out 10 of its electric buses in 2020.
BYD’s media and marketing teams didn’t respond to inquiries from The Epoch Times about any plans for EV cars for the Canadian market.
Transport Canada pointed out that importation of foreign-manufactured ZEVs, like those made by BYD, is “managed under a self-certification regime” and that these vehicles must still meet Canadian regulations.
A vehicle’s country of origin is not a factor used to determine its eligibility for import, Katherine Proulx, of Transport Canada told The Epoch Times on Jan. 8.
“ZEVs imported from outside of Canada may be eligible to receive an incentive, as long as they are purchased/leased from an authorized seller in Canada and registered to a Canadian address,” she said.
Strategic Plan
China has long held a dominant position in the critical minerals for battery production, and it has been leveraging that advantage to become the world leader in EV production. China also surpassed Japan as the world’s largest exporter of autos in 2023.BYD got to where it is with massive support from the Chinese government, according to Bloomberg. Beijing mandates EV output targets and offers cheap loans and R&D subsidies to EV makers, Bloomberg explained in a Jan. 7 video.
BYD has another cost advantage, Bloomberg noted, in that it makes its own batteries and outsources a smaller percentage of its component parts than other EV makers do, including Tesla. It is thus more resilient to supply chain disruptions.
Bloomberg reports that trade tensions between the United States and China are preventing BYD from entering the U.S. car market, while the European Union grapples with heavily subsidized EVs from China undercutting its automotive industry.
Thus BYD is now looking to build cars in Europe, according to Bloomberg.
Critique of EV Mandate
Some of Mr. Guilbeault’s claims regarding the ownership costs and achieving cost parity for EVs have been refuted by internal analysis from his own ministry, as first reported by Blacklock’s Reporter on Dec. 21.ECCC confirmed to The Epoch Times on Dec. 20 that analysis of the 10-year ownership costs of EVs that Mr. Guilbeault referenced was provided by Clean Energy Canada (CEC), a Simon Fraser University environmental think tank.
CEC had lauded the new EV mandate in a Dec. 19 news release, saying Canadian consumers can save between $30,000 and $50,000 over a 10-year period.
However, ECCC’s regulatory impact analysis statement released Dec. 20 reported figures showing that the net cost to Canadian consumers of switching to ZEVs would be $17.4 billion between 2024 and 2050.
Ms. Exner-Pirot said the analysis from environmental groups is “optimistic” and a “best-case scenario”—which rarely occurs.
She remarked that taxes on gasoline go to pay for roads and bridges but that “there has been no satisfactory explanation on how money will be raised, how those revenues will be raised when people are charging at home.” EVs also tend to be heavier than comparable gas-powered cars and thus put more stress on roads.
Ms. Exner-Pirot said in a series of Dec. 19 posts on X that Ottawa’s EV mandate is a way to justify securing EV supply in Canada, but that competing against the United States for scarce supply will drive up prices and take up valuable critical minerals from being used in electrification efforts elsewhere.
“The federal government cannot mandate auto manufacturers, dealers, electrification, consumer preferences etc in this way. It will drive up costs, reduce supply, cause unintended consequences and lead to perverse incentives,” she wrote.
