Canada is one of the favored immigration destinations for Chinese. According to a demographic analysis by Statistics Canada, as of 2021, about 1.8 million Chinese will live in Canada, accounting for about 5 percent of the total population. However, Canada’s policy is quite cautious when it comes to treating investments by Chinese automobile companies and exports of electric vehicles.
Recently, some foreign media, citing sources familiar with the matter, said that Canada is considering following the example of the United States and the European Union to impose additional tariffs on Chinese electric vehicles. The move took a new turn on July 2: the Canadian government announced it would launch a 30-day public consultation to seek views on a series of measures for imports of Chinese-made electric vehicles.
According to the official consultation document, the Canadian government wants to know whether additional actions are needed, including but not limited to developing further policy guidance, strengthening regulation, or restricting Chinese transactions and investments in Canada’s electric vehicle supply chain.
It’s worth pondering Canada’s intentions with this move: is it simply to protect its auto industry, or is it motivated by broader geopolitical considerations? Will these measures affect the globalization of Chinese EV companies?
Canada’s restrictions on investment by Chinese companies and its plan to impose tariffs on Chinese electric vehicles will not actually hinder the globalization of China’s electric vehicle industry chain.
As far as China’s auto exports are concerned, at present, Chinese cars are mainly imported into the Canadian market through parallel imports, and sales are not high. Customs export data show that China’s auto exports to Canada from January to April 2024 amounted to only 14,000 units, of which Tesla accounted for as much as 60%. In contrast, independent brands such as Nezha and Geely entered the Canadian market through parallel imports.
In terms of brand composition, American and Japanese cars dominate the Canadian market, and China’s own brands have not yet officially entered. As a result, “the way the tariffs are imposed will have less impact on independent brands.”
In contrast, lithium investment may be affected to some extent. In recent years, Chinese automobile companies have been investing in lithium mines in South America in full swing. BYD, Ningde Times, Zijin Mining and many other Chinese companies have gone to South America to “grab the mine”.
In Argentina, for example, data show that Chinese companies in the Argentine lithium mining market investment has reached billions of dollars. Recently, Argentina has four new lithium mining projects will be put into production in the next few weeks to months, which will make Argentina’s lithium annual production capacity increased by 79% to 202,000 metric tons equivalent. Among these four projects, a number of Chinese companies are involved.
However, as the saying goes, “the east does not shine in the west”, Indonesia, Brazil and other ASEAN and Latin American countries are also extremely rich in nickel resources and other lithium mineral reserves. Argentina, Bolivia and Chile occupy three countries form a “lithium triangle”, with nearly 60% of the world’s lithium resources. In addition, Brazil’s graphene, nickel and manganese ore reserves in the global rankings for the second, third and fourth respectively.
Chinese automotive companies can completely bypass the South American minerals that are wholly owned by Canada and invest in another way. In the Southeast Asian market, the cooperation between China and Indonesia in the nickel mining industry chain is also continuing to deepen. Most Chinese companies such as Hengshun Electric, Qingshan Iron & Steel, Huayou Cobalt, Jinchuan Group, etc., have acquired nickel mining rights by setting up joint ventures with local Indonesian companies. According to Indonesian official statistics, between 2012 and 2022, Chinese companies invested $14.2 billion in the local nickel industry.
In short, whether it is Canada or the United States and other parts of the country to use policy as a means to try to limit China’s electric vehicle industry to go global, it is difficult to achieve the purpose. China’s new energy vehicle industry leadership has been established and is still moving forward, and is expected to occupy a favorable position in the global electric vehicle industry change.