The Biden administration is quadrupling U.S. tariffs on electric vehicles manufactured in China. But Chinese-made cars are still finding their way into a receptive North American market — just to the north.

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Canada is seeing a surge of imports of Chinese-made EVs, particularly Tesla Inc. models made in Shanghai. The number of cars arriving from China at the port of Vancouver rose more than fivefold last year, to 44,400, after Elon Musk’s automaker started shipping Model Y vehicles made there.

The situation is drawing howls of protest from some auto-industry players who want Prime Minister Justin Trudeau to follow the White House and do more to protect the domestic industry.

Canada imposes only a small tariff on Chinese-made vehicles — about six per cent. It also allows consumers to tap a federal rebate program when they buy foreign-manufactured EVs. Since Tesla started exporting from its Shanghai factory last year, many purchasers have begun using that incentive.

“Here you can buy a Tesla made in Shanghai and get a $5,000 purchase incentive that is funded by Canadian taxpayers — including the Canadian companies who are competing with Tesla for that vehicle purchase,” Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, said in an interview.

“We’ve raised this publicly, we’ve raised it privately, everything short of yelling at the moon from the top of a mountain to get somebody to close that door,” he said. “And it’s wide open. It’s noticed in the U.S.”

Officials with Canada’s transportation department did not reply to requests for comment.

Three of every 10 EVs buyers requesting Canada’s federal rebate in the year ended March 31 bought a Tesla, according to data from Transport Canada — totalling some 51,000 cars. Some provincial governments, such as British Columbia, offer additional rebates worth thousands more dollars to EV buyers.

Canada remains a relatively nascent market for Chinese-made vehicles compared with Mexico, where companies including BYD Co. and Anhui Jianghuai Automobile Group Co. have made huge inroads over the past decade with relatively cheap cars. Among Asian countries exporting EVs into Canada, Japan and Korea still dominate.

And, as in the U.S., electric vehicles remain a relatively small part of the Canadian auto market. Canadians registered about 185,000 battery electric and plug-in hybrid electric vehicles last year — an increase of nearly 50 per cent from the year before, but still only 11 per cent of all new vehicle registrations.

The subsidies for purchasers are an attempt to drive that number higher. Trudeau’s government has set an ambitious target — 60 per cent of all new light-duty vehicles sold in the country should be zero-emission by 2030, the government says, and 100 per cent by 2035.

Volpe and others say that’s too aggressive, and that Canada’s goals should align more closely with the U.S. The Biden administration’s recent auto-emissions rules would potentially boost battery electric vehicles to more than 50 per cent of the market by 2032, according to modeling from the U.S. Environmental Protection Agency.

Teslas sold in Canada come from Shanghai or Fremont, Calif., according to the company’s Canadian sales centre. The company declined to comment how many vehicles exported to Canada originated at each plant. Customers can request the manufacturing location from the company, or find it with their vehicle identification number.

Canadian car dealers have started to see a growing number of Teslas manufactured in China appearing on the used car market, too, according to Huw Williams, a lobbyist for the Canadian Automobile Dealers Association. He expects that the disparity between Canadian and U.S. policy will grow in importance.

“A legitimate question for Canadian policymakers to address is how the Biden announcement and how some of the influx of products from overseas — which countries it’s coming from — affects the Canadian mix,” Williams said. “I think you’re going to see more and more attention paid to that issue here in Canada as a result.”

With assistance from Jay Zhao-Murray, Ailing Tan and Brian Platt.

Bloomberg.com