Chery Automobile is considering local production in Canada, a move that could make it the first Chinese automaker to build cars there, according to a report from Gasgoo citing Bloomberg. The company plans to start selling vehicles in Canada next year and sees the market as valuable even without access to the United States.
Zhang Guibing, Chery's executive vice president, said in an interview at the company's Wuhu headquarters that Chery is evaluating several options, including taking over idle capacity at existing plants or partnering with local firms. "Even without the U.S. market, Canada itself is worth building a factory for," he said. "We are looking for the right time to discuss feasible cooperation models."
Tariffs and trade barriers
High tariffs and technical restrictions currently block Chinese electric vehicles from entering the U.S. market. U.S. officials have made clear that Chinese cars built in Canada cannot be sold across the border. President Donald Trump has distinguished between imported vehicles and local production, saying in September that Chinese automakers could be allowed to build plants in the U.S. and hire American workers.
Zhang said Chery executives have long planned to enter the U.S. market, but with the door shut for now, the company is assessing idle capacity in Canada and talking with potential local investors. He did not name the partners.
Canada has opened its market to Chinese automakers following an agreement that allows an annual quota of 49,000 new-energy vehicles to be imported at low tariffs, with the quota increasing each year. Canadian Industry Minister Mélanie Joly visited China in June and met representatives from BYD, Geely, and Chery, who expressed willingness to discuss joint ventures.
Joly has set conditions for Chinese automakers building in Canada: they must establish local supply chains, comply with Canadian labor standards, and ensure vehicle software is secure enough to address national security concerns. She has also banned the use of semi-knocked-down (SKD) kits, where most of the vehicle is built in China and only parts are shipped to Canada for final assembly.
Chinese automakers push overseas
Chery's plan is part of a broader push by Chinese automakers to expand overseas as domestic sales face pressure. Chinese models have gained popularity abroad for their value and smart features, but the export wave has triggered trade policies in several regions aimed at protecting local brands.
Chery has already set up a joint venture plant in Spain to deal with EU tariffs and quotas, acquired Nissan's South Africa factory to create an African production hub, and is in talks to use Nissan's Sunderland plant in the UK for vehicle production.
BYD, the world's largest electric-vehicle maker, is also preparing to enter Canada and has said it is considering building a plant there. A Canadian politician revealed in September that BYD had inquired about buying an idle Stellantis factory near Toronto to produce buses. BYD previously operated a bus assembly plant in Ontario, which closed in 2023.
Geely also plans to enter the Canadian market next year but has not said whether it would build a factory there. Zhang said, "If we can find a suitable cooperation model, not just with Chery funding but with multiple parties involved, and production goes smoothly, I believe the Canadian government would welcome it."