Canada is exploring the creation of a joint automotive assembly plant with Chinese partners to manufacture electric vehicles for global export, a move that signals a shift in Ottawa’s long-standing auto industry strategy, Industry Minister Mélanie Joly said.
In an interview with Bloomberg News, Joly said Canadian automotive parts makers already operating in China — including Magna, Linamar and Martinrea — could play a role in a Sino-Canadian joint-venture assembly plant based in Canada.
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“We believe that these great Canadian champions can partner with Chinese EV companies to make a Canadian-Chinese car to export it around the world,” Joly said. She added there were “active conversations” on how domestic suppliers could complement potential Chinese investment in Canada’s automotive sector.
The initiative reflects a broader effort by Ottawa to reduce its reliance on the United States, where Canada’s auto industry has historically been closely integrated with American manufacturers such as General Motors and Ford Motor. For decades, vehicles and components have crossed the U.S.–Canada border multiple times during production, tying Canadian output closely to U.S. policy and trade conditions.
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Despite previously accusing China of unfair subsidies and imposing steep tariffs on Chinese electric vehicle imports, Canada has recently softened its stance. In mid-January, Prime Minister Mark Carney announced an agreement with Chinese President Xi Jinping allowing an initial quota of 49,000 Chinese electric vehicles to enter Canada at a reduced tariff rate of 6.1%, compared with the existing 100% levy. In return, China agreed to lower tariffs on selected Canadian goods.
Security concerns remain a sensitive issue. Canadian officials have previously warned that modern vehicles’ cameras and sensors could pose risks near critical infrastructure. Joly said those risks could be mitigated by involving domestic technology providers, citing QNX, a vehicle software firm based in Ottawa.
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“We can find a way to have software in the car that will address the security concerns,” Joly said. “I’ve already raised the fact with many Chinese companies that QNX is a state-of-the-art company that we could scale even more around the world.”
Canada is not fully severing ties with U.S. automakers. Last week, Joly and Carney unveiled a revised automotive strategy that keeps retaliatory tariffs on U.S.-made vehicles while introducing import credits that lower tariffs for companies producing more vehicles domestically. The government is also scrapping mandatory electric vehicle sales quotas, replacing them with stricter emissions standards for manufacturers and new purchase incentives for consumers.
