05 | Canada gets its China-made EVs

The Polycrisis team’s having a short break, so we’re sharing a couple of episodes from other podcasts that are very relevant to our themes. 

Chinese EVs are just beginning to arrive in Canada this week; but – as we wrote back in January – the more significant element was Carney’s government making a promise to Canada’s own auto manufacturers: that they could attract new investment and tech from Chinese car companies. And that would lessen their deep reliance upon the US car industry and market – which is doubling down on highly polluting  internal combustion engines, while most of the rest of the world moves rapidly towards electric vehicles.   

This episode is from our friends at The Wire China. It was recorded in April before Trump visited Beijing. 

Contact us at: polycrisispodcast@gmail.com

Links:

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China’s Connected Vehicles Widen the U.S.-Canada Disconnect

A Chinese EV maker that is expanding in Canada has ties to a U.S.-sanctioned surveillance company, illustrating the data and security risks connected vehicles pose.

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Transcript

0:10

Hello, Kate McKenzie here. The polycrisis team is taking a short break, so we're sharing a couple of interesting episodes from other podcasts in the meantime. This episode is from our friends at The Wire China, and it's about Chinese electric vehicles in Canada. So in January, the same month that China's Prime Minister Mark Carney gave a viral speech on sovereignty at Davos, his government announced that Chinese EVs would be allowed back into the country. That reversed a decision back in 2024 to effectively block them with 100% tariffs in solidarity with the US Biden administration. Chinese EVs have just started arriving in Canada, but as we wrote back in January, the more significant element of all of this was Kearney's government making a promise to Canada's own auto manufacturers that they could now attract new investment and tech from Chinese car companies. And that that would lessen their deep reliance on the US car industry and US market, which is doubling down on highly polluting internal combustion engines while the rest of the world moves rapidly towards electric vehicles. This episode was recorded in April ahead of Trump's big visit to meet with Xi Jinping in Beijing. But the WIRES reporter Elliott Chen hones in on some of the ironies and complexities that were highlighted by that visit, where the US President and his entourage of CEOs sought out Chinese investment and market access. For example, Elliot points out that the US is threatening to ban imports of any Canadian vehicles made with Chinese companies, but it also might be competing with Canada to attract Chinese auto facilities in the US. Take a listen. Hello and welcome back to the Wire China podcast. I'm Savannah Billman, calling in from New York City, and on the other end of this call is my colleague Elliot Chen, based in Toronto. But before we get going on this week's episode, I just want to make sure all our listeners had a chance to read through our big story from the last two weeks an oral history of the Hainan spy plane crisis of 2001. We've just made part one of this epic free to read on our website, thewirechina.com. Twenty five years later, it's not a breaking story anymore, but it's no less important. Planes and ships transiting the South China Sea and airspace still have close and risky encounters with Chinese military craft. The US government still springs into action to rescue stranded Americans after crashes in foreign airspace, as we saw in Iran just a few days before recording this episode. You can listen to the previous two episodes of this podcast for a preview, but we've also made part one of the oral history free on our website. Part two is still exclusive for our subscribers, and we hope you'll consider becoming one. Now back to the main topic of today, Chinese EVs in Canada. In January, Canada announced a deal with China that would involve opening its market to Chinese cars. After so many years of Canada and the US presenting a united front against Chinese EVs, some were surprised by the move, but certainly not our unofficial Canadian car correspondent, Elliot Chen. Hi, Elliot. Hi, Savannah. It's great to be back. So, Elliot, last year you reported that Canada was mauling over allowing Chinese EVs on its roads. Now, obviously, your words at the time have come to pass. Can you give us a very high-level overview of Canada's divergence from its southern neighbor on the EV issue? So I think in order to understand what's going on in Canada with Chinese EVs right now, you have to go back to at least two years ago. So around the time of 2024, the Biden administration at the time and the liberal government under Justin Trudeau in Canada were very much aligned on many things on foreign policy, particularly on China. And at the time, when the US was seeing the emergence of the Chinese electric vehicle industry and its growing exports abroad, the US imposed 100% tariffs on Chinese electric vehicles. And very quickly after that, Canada basically moved in lockstep and did so as well. Then everything changed. Of course, Donald Trump was elected and started threatening to invade and annex Canada. And with that, we saw a growing divergence between Canada and the United States on trade issues, but also foreign relations issues. So in January, uh now Prime Minister Mark Carney visited China. At the time, he made this famous pronouncement while he was there that we are in a new world order. And of course, shortly after that, gave his viral Dabo speech that sort of laid out Canada's new position vis-a-vis US and the world. And one of the big announcements as well to come out of that Beijing visit was that Canada said that it would drop that 100% tariff on Chinese EVs and also allow in starting this year a limited number of EVs into Canada imported from China, starting with 49,000 cars this year. And that number will slowly tick up by 6.5% every year. At the same time, Canada is also actively courting Chinese automakers to set up factories in this country. BYG has said that it's looking, actively considering it. And just last week we also learned that Leap Motor, which is another Chinese EV company partially owned by Stillantis, is also in active discussions about setting up in a mothballed Stillantis factory here. So that's where we stand. The US right now doesn't allow Chinese EVs in, but Canada is very much taking a different path. What has happened to all the pushback against Chinese EVs that was there in the first place? Protecting domestic industry, for example, or the need for alignment with the United States. Are these things still concerns for Canadian policymakers? So, Savannah, I think this is a good time for me to make a confession. This is something our editors don't actually know about. And so I'm gonna use this opportunity to share a little bit of a story. So in the spring of 2023, um, I was still a relatively new reporter at The Wire. And that week in March, uh, President Biden was visiting Canada for his first state visit at the time. And I snuck into that summit. Um, I had just bought my first car. Uh I had a surprisingly light week at work, and so um I got an email from Global Affairs Canada, which is sort of the State Department over here, that was saying, like, do you want a media pass? Uh and so I signed up. I mean, it was in part that I wanted to go see the president and the prime minister. I also wanted to check out Air Force One for myself. And so I drew up to Ottawa, and with that time, our editors ended up sort of joining the media pack at that visit. So that may be news for them, but uh I will add that in retrospect, um, sneaking off and doing that was actually a really valuable experience because I got to sort of witness the US-Canada relationship that once was. So at the time, President Biden gave this address to the House of Commons in Canada, and he he gave this speech that I actually thought was really lovely. Um he described the relationship between the US and Canada. I'll just sort of quote a line from that speech in which he said, No two nations on earth are bound by such close ties: friendship, family, commerce, and culture. Our labor unions cross borders, so do our sports leagues, baseball, basketball, hockey. And then he adds, Americans and Canadians are two people, two countries, in my view, sharing one heart. So that's all gone now. Uh, thanks to overwhelmingly President Trump's repeated threats to annex Canada. Over here, where I live now and have lived for five years, there's this real feeling of betrayal. The number of US trips, the canon, the number of Canadian trips to the US are down. The country is really quickly trying to diversify its trading partners. And the feeling of betrayal is just especially acute in the automotive sector, uh, thanks to cases like Stillantis shuttering a factory in Ontario in order to double down on investment in the US. And so there's this feeling that in this industry, there's this zero-sum game uh when it comes to production. And I think that's all just really important context to understand why it is that Canada has shifted tack on Chinese EVs and why it is that some of the things that aligned Canada so closely with the US even two, three years ago, are no longer priorities. I think I would also just add to that that while protecting domestic industry is something that's of course important over here, I think one of the factors that made it easier for Canada to embrace Chinese electric vehicles is the fact that for the most part, there actually isn't a domestic auto industry in the same way that there is in the US. Uh, of course, there are factories, but most of those factories are producing cars on behalf of American brands or or foreign brands. Like Canada doesn't have a homegrown automaker. Just all of those factors together, I think, are important to understanding why it is that we're seeing this divergence when it comes to autos today. Thank you, Elliot, for your entrepreneurial reporting and sitting on that anecdote until the time, which we're very lucky is this podcast. Um, so let's zero in a little bit on the security concerns. I mean, US-Canada relational breakdown aside, a lot of the US actions have been motivated by data collection technology from Chinese EVs and security concerns around that. You'll be covering this in our upcoming issue, of course, but let's give a little bit of a preview now. You've identified one company that could prove particularly problematic for Canada. Can you give us an overview of that company and why it's raising alarms? Early on in this podcast, um, I mentioned uh the name Leap Motor. Uh, so this is a Chinese EV company. It's based in Jiang province. In Chinese, its name is Ling Pao. Most people probably haven't heard of Leap Motor to the extent that people have heard of Chinese EV brands. Really, it's companies like Gili or BYD that have really dominated the headlines. But Leap Motor is no slouch. It made 600,000 cars last year, but it's also controversial because it has had long-standing ties to a controversial Chinese video surveillance company called Dahua Technology. Dahua has been blacklisted in the US and the European Union, as well as a number of other countries which have accused it of aiding repression and surveillance in China, particularly of uh the Uyghurs and Muslim minorities in Xinjiang. In the US, Dahua has been added to the 1260H list, which is the Defense Department's list of Chinese companies that are alleged to be contributing to China's military civil fusion strategy. And Leap Motor was born out of this company in 2018. Um it was basically a spin out. Its largest shareholders were Dahua and Dahua's two co-founders. Um, and so at a time when the US and also a number of other Western countries are growing concerned about the growing data and cybersecurity implications of an increasing number of Chinese connected vehicles rolling out on Western roads, it's notable that here we have an automaker with extensive connections to this highly blacklisted surveillance firm that is also actively considering setting up in Canada. So, how close are these connections between Leapmotor and Dahua? When Leap Motor was founded in 2015, um, as I mentioned, its largest shareholders were Dahua and its two co-founders, Fu Li Chian and Zhu Xiangming. In addition to that, Dahua has sort of extensive commercial relationships with Leap Motor. In 2023, when Stellantis bought a 21% stake in Leapmotor, Dahua sold its direct stake in the company, but at the same time has uh maintained personnel and commercial relationships with the company. So, for example, uh several of Leap Motor's vice presidents previously worked at Dahua. One of Dahua's co-founders is now chairman of Leapmotor. And the two companies together jointly developed an AI chip that is used for autonomous driving capabilities called Ling Sin01. And that chip is embedded in many of Leapmotor's cars. For those wanting to know more on what this could imply for Canada, Elliot's story will be published on thewirechina.com this Sunday evening, Eastern Standard Time. We'll leave the rest of your reporting for our readers on Sunday. But one final question from me, Elliot. The context of all of this is, of course, Chinese EV's seemingly unstoppable global rise, as our readers and listeners are no doubt aware. We've covered the major players and expansion into markets from Southeast Asia to Latin America on the wire China for some time now, but North America was always a nut that China's car giants could never crack, at least until now. Is the world just in an unstoppable wave of Chinese automobile technology that we can no longer avoid? Was Canada's decision to allow Chinese EVs inevitable? So this is a story that is continuing to play out in real time. And I think what's interesting and exciting about it is that it's also just changing really quickly. On the question of whether this was inevitable and whether these cars might be coming to other countries in North America, I think I would just add that one interesting dynamic that we've also reported about in recent articles is how the US is going to respond to the prospect of an increasing number of these Chinese vehicles, but also Chinese auto factories coming to North America. One of the things that seem to have captured President Trump's attention, for example, is the fact that some of these automakers want to build here. And we heard from him in January at the Detroit Auto Club saying, let them come in, let them build a factory in the US. And that's created a really interesting dynamic here because even though that hasn't happened yet, I think a lot of people in the industry are waiting to see whether a deal will come out of his visit to Beijing in a couple of weeks. But also it could create a sort of competition, a bit of a bidding war for these factories in North America that could really play into the hands of the Chinese automakers. There's a lot of complicated dynamics that could really tip the balance. In Canada, for example, the unions have a really important voice when it comes to how factories are set up and also the extent to which the cars will be fully built here. Whereas in the US, you know, President Trump may not be so picky. He could offer up, for example, as one analyst noted to me, just a plot of tax-free subsidized land in Alabama, where historically unionization rates are lower and automaking has really thrived in the last few years. And so if Trump goes to Beijing and announces this deal, we could see the entire landscape change all over again. And this talk about where these EVs are going to show up, there could yet change. We might not all be driving BYDs or Leap Motors next week, but there might be a day where the tradition of the great American road trip is undertaken behind the wheel of a Chinese car sooner than we think. Thank you so much, Elliot. Elliot's reporting on Leap Motor will be published on thewirechina.com this weekend. Along with an op-ed on Xi Jinping's perplexing vision for the Chinese economy by Yen Meixia, an essay adapted from Ike Freiman's new book, Defending Taiwan, and more. To get full access to all of our story archives and read Elliot's reporting this week in more detail, you can visit us at thewirechina.com slash subscriptions. Or if you prefer to first dip your toe in the water, you can sign up for our free newsletter on Substack or Thewirechina.com slash newsletter.