The year 2026 is anticipated to be a pivotal moment in the global strategy of Chinese electric vehicle (EV) manufacturers, as more western nations open their doors to high-performance models produced in China.

While not expecting an immediate surge in export sales, manufacturers like BYD and Geely are poised for a positive start in some untapped markets. Analysts suggest this initial phase will help them build a reputation for production capability and technology, before establishing a long-term foothold.

"Policy adjustments in the EU and Canada have opened up hope for Chinese electric vehicles to penetrate major western automobile markets," stated Qian Kang, owner of an automotive circuit board factory in Zhejiang province. He added that this is the time for companies to focus on brand building and quality control to persuade local consumers.

Electric vehicles exported from a port in Hangzhou, Zhejiang province, eastern China, in 4/2025. Photo: AFP

Canada will remove the additional 100% punitive tariff on pure Chinese electric vehicles, while imposing an import quota of 49,000 vehicles annually. This information was announced by Canadian Prime Minister Mark Carney following a state visit to Beijing. However, Canada will maintain a basic tariff of 6,1% on Chinese electric vehicles, most of which have a range exceeding 500 km and are equipped with modern infotainment systems.

This move comes less than one week after the EU and China reached an agreement to replace tariffs ranging from 7,8% to 35,3% with a price commitment deal. This helps improve profit margins for Chinese electric vehicle companies as they expand into international markets. Geely believes Canada's decision to lower tariffs has created opportunities for the company and its domestic competitors. "This is a positive signal, but it is too early to provide a detailed assessment," the company stated.

China is currently the world's largest producer of electric vehicles. Last year, the country exported 2,6 million electrified vehicles, including pure electric and plug-in hybrid models, marking a 104% increase year-on-year, according to the China Association of Automobile Manufacturers. Chinese electric vehicles have dominated in Southeast Asia and Russia, but have yet to exert significant pressure on major brands in key markets like the US and Europe. Investment bank UBS forecasts a slowdown in China's electric vehicle export growth this year, due to the high base from the previous year and anticipated sales declines in Europe.

Electric vehicle exports from China to Canada were almost zero after Canada imposed a 100% tariff in 2024. According to Phate Zhang, founder of CnEVPost, the quota of fewer than 50,000 vehicles is not enough to create a breakthrough in production volume, but it could be a starting point if companies can convince consumers of product reliability.

In the first 11 months of 2025, BYD delivered 159,869 vehicles to European customers, a 276% increase compared to the same period last year. However, the company currently faces an anti-subsidy tariff of 17%, in addition to a basic 10% tariff on Chinese electric vehicles in this market.

Canada's cancellation of punitive tariffs is expected to improve BYD's profit margins, as exports currently account for about 20% of the company's total sales. China is also the world's largest electric vehicle market, accounting for about 70% of new electric vehicle sales globally last year, equivalent to 13 million vehicles.

"Previously, most Chinese exported vehicles were priced around 100,000 yuan (14,350 USD), but now models priced at 300,000 yuan (43,000 USD) are being sold abroad. This indicates that automakers are moving into higher-value segments through product upgrades," stated Xu Bin, Director of Research at UBS Securities.

Ho Tan (according to SCMP)