Canada’s decision to remove its 100% tariffs on Chinese-made electric vehicles (EVs) is set to reshape the country’s EV market over the next five years. While the agreement opens the door to any Chinese-built EV, Tesla is the clear front-runner to benefit — especially in the early years of the deal.
The Agreement
Under the terms of the five-year agreement, the exact terms of which have yet to be published by the Canadian government, it appears to be set up in phases. In the first year, companies are allowed to import 49,000 Chinese-made EVs, and by year five, that number increases to 70,000. Also by year five, 50% of those imports must have a price below $35,000, however no details have been provided as to whether there is a similar formula in the first years of the agreement.
That distinction matters. Tesla does not currently sell a sub-$35,000 EV anywhere in the world, while several Chinese automakers do. However, even if the price requirement is phased in, it is unlikely to be more restrictive than the final-year target. That would still allow any manufacturer to import at least 24,500 EVs at any price in 2026 — and Tesla is the only automaker positioned to immediately claim most, if not all, of that volume.
Here’s why.
Tesla’s Regulatory Advantage
Tesla used to import both the Model 3 and Model Y from Giga Shanghai into Canada in 2023, so the factory is already setup to produce both vehicles that meet Canadian regulations. While both models have since been refreshed — Highland for the Model 3 and Juniper for the Model Y — Tesla knows exactly how to navigate Canadian certification and compliance, giving it a major head start over brands that have never sold a single vehicle here.
Tesla’s manufacturing prowess also gives it an advantage. Giga Shanghai is already optimized for high-volume production of only two vehicles, the Model 3 and Model Y, and Tesla can redirect that production for Canada faster than competitors juggling dozens of models, trims, and regional variants.
Infrastructure is the final piece of the advantage. Tesla already operates 39 stores across Canada powering a nationwide Service and Delivery network. No China-based automaker, such as BYD, Nio, or Xiaomi, have any physical presence in Canada to support new owners, meaning a launch is likely at least 12-24 moths away. Those companies could accelerate this timeline by partnering with existing dealer networks, but even then, market entry is still many months away.
With all of this in place and tariffs no longer acting as a barrier, Tesla can move quickly and take the lion’s share of Chinese EV imports into Canada, if not all of it. It doesn’t need a dealer rollout, a marketing strategy, or years of regulatory groundwork — it can simply begin shipping cars much sooner than any other automaker.
The Elon Musk Factor
There is, however, one potential factor that could blunt some of Tesla’s momentum in Canada — Elon Musk. Over the past year, Musk’s increasingly polarizing public persona has become a risk for the brand, particularly in Canada where sentiment has shifted more sharply than perhaps in other markets. Even with lower prices, some buyers may hesitate because of Musk’s political commentary.
How much this matters will depend on whether price cuts outweigh brand fatigue — but it is a variable that didn’t exist when Tesla last relied on China for Canadian supply.
When Could Teslas from Giga Shanghai Arrive in Canada?
Tesla appears to be moving quickly to take advantage. Within hours of the announcement last week, the company’s website was updated to remove the ‘Order Now’ button for the Model 3. While this button was removed last year due to the U.S. tariffs increasing prices by 20%, it had recently been reinstated after pre-tariff inventory became largely depleted.
Now it has been removed again, and even the ‘Order’ button in the header redirects customers to existing inventory, whereas previously this would take them to the configurator.
With all of this in place, Tesla could begin shipping Model 3 and Model Y from Giga Shanghai in a matter of just a few months, the biggest hurdle likely being obtaining regulatory approval for the new Highland and Juniper refreshes. This would also mean Model 3 prices will return to normal, and perhaps even lower than before tariffs hit last year.
There is one wildcard however, and that’s the Model Y Performance. Many Canadian customers have recently seen their delivery timelines slip into the late spring or summer, and while Tesla hasn’t explained the reason, it raises the possibility that supply is being reshuffled. One scenario is that Tesla is preparing to shift some Model Y volume from Giga Berlin back to China to take advantage of the new tariff environment — even though Giga Shanghai does not yet build the Performance variant. That could mean Tesla is temporarily rebalancing production, or laying the groundwork for future Performance builds in China to support overseas markets like Canada.
The other scenario is that Tesla is experiencing some kind of logistics delay in shipping vehicles from Germany to Canada and due to lower cost, will continue to ship Model Y Performance from Giga Berlin to Canada even though Chinese-made vehicles no longer face 100% tariffs.
