Have you ever wandered where the passenger cars that are running on streets in British Columbia are made? Are most of them domestic or foreign? And does the answer look very different for electric vehicles than for the overall fleet? I have some answers for you based on data from one of my ongoing research projects about the electrification of mobility in BC.

The table below shows the composition of British Columbia's vehicle fleet of passenger cars at the end of June 2024, sorted in descending order of their market share by country of origin. The country of origin can be decoded from the first two letters of each car's 17-digit vehicle identification number (VIN). The VIN also identifies the model year of each car. The first data column in the table shows the percentage shares by origin country for the overall fleet, and the second data column shows the percentage shares by origin country for battery-electric vehicles (BEVs). The last two data columns filter the data by the latest model years (2022, 2023, 2024, and 2025).

Only six producer countries have a fleet share larger than two percent. Unsurprisingly, most vehicles in BC are manufactured in the United States (roughly 35%). Our southern neighbour dominates our vehicle market. About 18% each of passenger cars originate in Japan and in Canada. The next three producer countries with less than 10% market share each are Mexico, Germany, and South Korea.

The picture looks different for battery-electric vehicles. Most BEVs (61%) were manufactured in the United States. The runner-ups are South Korea (13%), China (9%) and Germany (8%). Other producer countries have much smaller shares. There are far fewer countries producing BEVs than conventional cars.

The data for more recent model years reveal an important story about the changes in the vehicle manufacturing industry. While the United States has maintained its position, Canada's auto industry has dropped in importance while South Korea's role has grown. South Korea's market share has reached 13% and is almost at par with Canada's domestic share.

I have saved the most important story for last. Look at the market shares in the last column for BEVs with model years from 2022 onwards. The United States has covered half the market, dominated by Tesla. But look at who is second: China, with 17% market share. Third is South Korea with roughly 13% and fourth is Germany with 9%. A large chunk of Chinese BEVs are Teslas produced at the company's Gigafactory in Shanghai, which opened in October 2019 and expanded significantly during 2022. Because the United States has an effective ban on Chinese vehicles (due to high import tariffs), Tesla has been shipping vehicles to Canada from China rather than from their plant in the United States.

China appears at the verge of leapfrogging into Northern American automobile markets through its push into electric vehicle manufacturing, aided by ample government subsidies, lower labour costs, and a head-start in economies of scale. The United States already has massive Section 301 tariffs (100%) in place to keep Chinese EVs out of the US market. In June 2024, the European Union placed The EU will impose additional tariffs on electric cars produced in China. Duties are differentiated by producer: state-owned manufacturer SAIC faces 38.1%, Geely faces 20%, and BYD faces 17.4%. While the EU approach is grounded in WTO rules, the US application of Section 301 of the Trade Act of 1974.

Here in Canada, the Globe and Mail's Steven Chase reported Ottawa [is] on track to slap big tariffs on Chinese-made EVs and cut eligibility for subsidies as well. Meredith Lilly, a professor colleague at Carleton's Norman Paterson School of International Affairs, argued in the Globe and Mail that tariffs on Chinese EVs are a no-brainer, asking why Ottawa is slow to follow the lead by the US and the EU. There is strong pressure on Canada's government to align its EV policies vis-a-vis China with US policy, lest Canada get caught in the middle. Other argue the opposite. Toby Heaps and Ralph Torrie argued, also in the Globe and Mail, that we should let Chinese BEVs into Canada because The likes of China's BYD have affordable electric vehicles. If we want to fast-track the transition to electric vehicles, we need competitive options for prospective BEV buyers.

It is clear that the transition to electric vehicle is starting to reshuffle the auto industry. This has domestic car makers worried, and is getting our politicians worried about jobs. There is always another election around the corner, after all. So it is not surprising that there appears to be a broad political consensus emerging in that the country needs to create breathing space for its auto industry to make the pivot to producing electric vehicles without getting its manufacturing base destroyed by lower-cost Chinese competitors. Governments in Ottawa and Toronto and Montreal have already been lavishing generous subsidies on battery plants. Federal and provincial governments want to see these investment pay off politically as well as economically. My sense is that there is a significant likelihood that Ottawa will follow the EU's lead and impose anti-dumping or countervailing duties on Chinese EV makers.

Should Canada follow the US approach or the EU approach? A thorny issue could arise if Chinese car makers were to try and set up shop in either Canada or Mexico to enter the US market through the backdoor. The US would likely not stand by idle should that happen. However, I don't see Chinese investments into car making in Canada as a likely pathway because doing so would erode many of the cost advantages that the Chinese producers have in their home country today. An investment in Mexico might be more likely (see Reuters news from August 21) While China's car makers have opened production plants in other countries (e.g., BYD's plant Thailand), entering the North American market is a more challenging proposition, where quality and features often matter more than price.

On Augst 26, the Government of Canada announced that it will mirror the US approach and impose 100% tariffs on Chinese-made EVs, effective October 1, 2024. This tariff is called a surtax as it will rely on sections 53(2) and 79(a) of Canada's Customs Tariff Act. This is a rather blunt instrument compared to the WTO-compliant approach involving countervailing subsidies to counter alleged subsidies, which is what the EU has been pursuing. I presume the reason why Canada is following the US is twofold. First, Canada is interested in reducing any potential trade frictions with the United States and align trade policies closely. Second, elections are coming in the United States and Canada, and politicians of all stripes want to be seen to be tough on protecting domestic jobs.

How worried should North American auto makers be about low-cost Chinese competitors? Brands still matter—and early leads may not last. Tesla's early domination of BC's BEV market is eroding as other brands are catching up in terms of innovation and product differentiation. And Elon Musk's politics in support of Donald Trump may make the Tesla brand increasingly toxic, as Jasper Jolly reported in The Guardian, asking: is Elon Musk driving away his target market? Already bumper stickers are showing up declaring that "I bought this [car] before we knew Elon was crazy." It is puzzling why a Chief Executive Officer of a large company would attach himself so closely to a political cause and alienate a significant part of his company's customer base. Musk's hubris may come at a price because his name is tied so closely to the brand. But Chinese-made BYDs are not in direct competition with Teslas: BYDs compete on price, while Teslas mostly compete in the premium segment. Many European car buyers are more price-sensitive and are used to driving smaller cars, and thus BYD has a larger opportunity there than in North America.

Auto consultancy Edmunds tracks EV market shares in the United States. Tesla's market share is slipping. While in 2021 the company held two-thirds of the US EV market, during the first months of 2024 that number had dropped to just over 50%. Ford is making inroads with their F150 Lightning pick-up truck and and their Mustang Mach-E. Hyundai, Mercedes-Benz, Rivian, and Kia are doing well too. As more and more vehicle makers offer greater variety, Tesla will have to up its game. It's new Cybertruck is making headlines, but far from all positive. It's unusual angular design appears unlikely to appeal to a broad audience.

As the EV transition is gaining momentum, buyers in British Columbia may find a resource curated by BC Hydro particularly useful. They have put together a web site with all Electric vehicles available in B.C., showing manufacturer's suggested reatail price along with available rebates. It is encouraging to see many models retailing for well below $50,000.