Import of Chinese electric vehicles | Without tariffs, Canadian industry risked being crushed

(Ottawa) The mandarins at the Department of Finance are categorical: Canada’s electric vehicle industry risked being crushed by Chinese competition in the Canadian market without the imposition of tariffs.

This protectionist measure is therefore considered crucial to protect the country’s automobile industry as it begins a shift towards the electrification of transportation, argues the Ministry of Finance in a briefing note intended for Finance Minister Chrystia Freeland.

This note was written at a time when the Trudeau government was juggling the idea of ​​following in the footsteps of the United States, which has been imposing since 1^er August 100% tariffs on electric vehicles built in China to prevent the American market from being flooded with much less expensive cars.

The Press obtained this confidential note under the Access to Information Act.

Last month, Prime Minister Justin Trudeau finally announced, after a period of mandatory public consultations, that Canada would in turn impose 100% customs tariffs on Chinese vehicles as of 1^er october. Customs tariffs of 25% will also be imposed on Chinese steel and aluminum from October 15.

This decision aroused the ire of the communist regime in Beijing, which announced at the beginning of September the opening of an anti-dumping investigation on Canadian canola in retaliation. China also wants to challenge Canada’s imposition of tariffs before the World Trade Organization.

Strong growth

“2023 marked the first year that Canada imported a significant number of electric vehicles (EVs) and hybrid vehicles from China ($2.2 billion for EVs and $83.5 million for vehicles). hybrids). The Canadian automotive industry is concerned about the significant increase in Chinese imports which could compromise the development of the EV industry in Canada even before it is well established,” we emphasize in this briefing note. intended for M^me Freeland.

It also notes that China has become, since 2020, the largest manufacturer and exporter of EVs in the world and that its production capacity continues to grow at an impressive speed.

Production there is such that by 2025, China should be able to build more than 36 million electric vehicles, some 20 million more than expected domestic demand. Already in 2023, China’s global EV exports amounted to around 47 billion, compared to just 170 million five years earlier.

“In 2023, BYD, a Chinese company, will overtake Tesla as the world’s leading EV producer. Other Chinese players like Geely, NIO, Chery, SAIC and Great Wall Motors are also expanding. Chinese EV brands have made inroads into foreign markets thanks to competitive prices across the entire value range,” the document states.

According to the analysis of the Ministry of Finance, China managed to quickly establish itself as a world leader in this area because Beijing implemented a supportive policy on several fronts. It increased the provision of preferential loans and other direct financial support, subsidies for domestic purchases, export controls for production inputs, and restrictions on foreign ownership, among other things.

“When large Chinese EV producers entered other markets, they quickly gained market share, often at the expense of local EV producers. Given their dominant position, economies of scale, lead in EV manufacturing and design, and large-scale government subsidies, Chinese EV producers would likely make it difficult for EV producers to grow and compete. Canadian EV industry in the Canadian market,” we also argue.

Unfair trade practices

According to the president of the Automotive Parts Manufacturers Association of Canada, Flavio Volpe, the analysis of the Department of Finance is entirely consistent with reality.

In confirming the decision to impose tariffs last month, Minister Chrystia Freeland cited China’s unfair trade practices, but also “terrible” environmental and labor standards which, according to her, allow the China to price and market products unfairly, which has a huge cost to the environment and workers.

At the minister’s office, a spokesperson maintained that the decision to impose tariffs was based on several factors.

“Action is needed to level the playing field for Canadian auto workers and the Canadian electric vehicle industry – especially in the face of China’s intentional policy of state- and government-led overcapacity. China’s lack of rigorous labor and environmental standards, which seriously harms competition. We will always stand up for Canadian workers and businesses,” spokesperson Katherine Cuplinskas said in an email to The Press.

With the collaboration of William Leclerc, The Press

Leapmotor T03: the small Chinese car that is shaking Europe

The Stellantis automobile group (Citroën, Fiat, Chrysler) will sell in Europe from October a first electric car of Chinese origin called T03, the result of a joint venture formed with the Chinese manufacturer Leapmotor. The microcar produces 94 horsepower and theoretically travels up to 265 km per charge. It will cost 18,900 euros ($28,400 CAD), but could qualify for a government rebate of 4,000 euros ($6,000 CAD), which would make it the most affordable car in the European Union. If its final assembly takes place in Poland, as Stellantis plans, it will likely avoid the 17.7% import tax on electric vehicles built in China. Stellantis and Leapmotor plan to also sell a compact SUV, the C10, as well as four other inexpensive electric models by 2027. This shift threatens an already fragile auto industry, where Renault, Mercedes-Benz and even Stellantis could suffer from an arrival mass of cheap Chinese electric vehicles.

Alain McKenna, The Press