Canada plans to lift import restrictions on Chinese electric vehicles (EVs) in early 2026, establishing an annual low-tariff import quota of 49,000 units. The policy initially drew strong interest from local dealerships, generating over 150 letters of intent. However, market enthusiasm quickly cooled, with most dealers shifting to a wait-and-see stance. In May this year, the Canadian Automobile Dealers Association organized a delegation of more than 70 dealers to visit Chinese EV manufacturers’ factories and attend the Beijing Auto Show. Although participants were generally optimistic before the trip, over half abandoned their cooperation intentions after gaining firsthand insights into operational details. Key concerns included: new dealerships likely facing losses for the first two to three years; heightened risks stemming from intense domestic price wars in China and overseas dealership disputes; and the fact that the 49,000-unit annual quota must be shared among multiple Chinese brands, Tesla vehicles made in China, and several brands under Geely, with no guaranteed allocation for any single brand. Opening a dealership in major cities like Toronto or Vancouver requires an investment of several million Canadian dollars, and each store needs to sell hundreds of vehicles annually to turn a profit. However, the limited quota makes it difficult to ensure a stable vehicle supply, preventing dealers from formulating long-term business plans. Additionally, differences between Chinese and Western automotive operating models add further uncertainty. In April, the Canadian association issued a risk advisory to its 3,500 members, urging caution regarding automakers’ direct-sales models, after-sales responsibility allocation, and warranty claim terms—but automakers have yet to provide clear after-sales or partnership frameworks. Moreover, Canada’s lengthy vehicle compliance certification process—expected to take until at least year-end for the earliest approvals—could delay vehicle deliveries until 2027, further extending the path to profitability. Against this backdrop, Chinese automakers such as BYD, Chery, and Geely have already adjusted their strategies, abandoning nationwide dealership rollouts and instead considering only a few pilot stores in key cities, slowing their channel expansion pace. Industry experts note that establishing joint-venture vehicle manufacturing plants in Canada could be the key to breaking the deadlock. Locally produced vehicles would be exempt from import quotas and could leverage Canadian regulations to access the U.S. market. Canada’s Minister of Industry has already held talks with executives from three Chinese automakers regarding potential plant construction, though no concrete agreements have been finalized.