Canada Spent $52 Billion Subsidizing EV Plants. Then Carney Let Chinese EVs In. The Math No Longer Works.

The math was always ambitious. Canada committed $13.2 billion in production subsidies to Volkswagen for an EV battery plant in St. Thomas, Ontario. Then $15 billion to Stellantis-LG Energy Solutions for a battery plant in Windsor. The combined subsidy: $28.2 billion by the end of 2032 — with the federal government covering two-thirds and Ontario covering one-third. The Parliamentary Budget Officer’s assessment was blunt: it would take until 2043 — twenty years — for government revenues from these two plants to equal the subsidies. The government had claimed Volkswagen alone would pay for itself in under five years. PBO Yves Giroux called that timeline unrealistic.¹

That 20-year estimate assumed the plants would operate at capacity, the EV market would grow, and the domestic industry would be protected from state-subsidized foreign competition. None of those assumptions hold today.

The $28.2 billion for Stellantis and Volkswagen is only part of the total. Add Honda’s $15-billion EV manufacturing complex in Alliston, Ontario — supported by up to $5 billion in federal and provincial subsidies. Add the $529 million in Strategic Innovation Fund money to Stellantis for the Brampton assembly plant. Add the billions more in federal purchase incentives, charging infrastructure, and supply chain support programs. The total public investment in Canada’s EV industrial strategy exceeds $50 billion across all levels of government and programs.²

This was supposed to be the foundation of a new Canadian manufacturing economy — battery plants, assembly lines, supply chains, and tens of thousands of permanent jobs. It was the largest industrial bet in Canadian history. And in January 2026, the Carney government opened the door to the competition that could make the entire bet worthless.

Under the Trudeau government, Canada imposed a 100% tariff on Chinese-made EVs in 2024, matching the U.S. approach under Biden. The tariff wall existed for one reason: to protect the subsidized domestic industry from Chinese manufacturers that benefit from massive state support, cheap labour, and economies of scale that no Western producer can match. BYD — now the world’s largest EV maker — sells vehicles globally at prices that undercut every North American competitor, often by half.³

In January 2026, Carney cut that tariff from 100% to 6.1% — the most-favoured-nation rate — on up to 49,000 Chinese EVs per year. The quota rises to 70,000 by 2030. Half must be priced under $35,000. The deal was struck in exchange for China reducing tariffs on Canadian canola, lobster, crab, and peas. Carney said the deal would drive “considerable” new Chinese joint-venture investment in Canada and create “new auto manufacturing careers for Canadian workers.”⁴

The first investment to emerge was Stellantis proposing to assemble Chinese Leapmotor EVs from knock-down kits at its idle Brampton plant — a proposal that Joly rejected within hours because it kept all the real manufacturing jobs in China. The second: BYD scouting 20 dealership locations across Canada, starting in the GTA. Chery and Geely are also preparing to enter the market.

Joshua Fernandez / Unsplash — BYD plans to open 20 dealerships across Canada within its first year — starting in the GTA, then Vancouver, Montreal, and Calgary. The company sold 2.26 million battery-electric vehicles globally in 2025, surpassing Tesla.

The competitive reality is stark. BYD sold 2.26 million battery-electric vehicles globally in 2025 — crushing Tesla’s 1.64 million. BYD’s overseas sales alone surpassed 1 million units, up 150% year-over-year. The company’s vehicles are priced competitively in every market they enter. The Dolphin hatchback, a likely Canadian import, sells for under $20,000 in many markets. The Atto 3 compact SUV is under $35,000. These are the prices that Canadian consumers — who saw domestic EV sales drop 25% in 2025 — are desperate for.⁵

The subsidized plants in St. Thomas and Windsor are designed to produce batteries for vehicles that will be assembled by Western manufacturers and sold at Western prices. Those prices cannot compete with BYD at 6.1% tariff. The 20-year break-even analysis assumed a protected market. Carney removed the protection. The math that was already stretched to its limit just broke.

The Stellantis trajectory tells the full story. Canada gave Stellantis $15 billion in production subsidies for the Windsor battery plant. Canada gave Stellantis $529 million through the Strategic Innovation Fund to keep the Brampton assembly plant running until 2035. Stellantis moved Jeep Compass production to Illinois. The Brampton plant went dark. Three thousand workers were laid off. Then Stellantis proposed assembling Chinese Leapmotor EVs from kits shipped from China — a proposal the government rejected because it bypassed the entire Canadian supply chain the subsidies were supposed to build.⁶

Meanwhile, Chinese-made EVs are excluded from Canadian purchase incentives. But they don’t need them. BYD’s vehicles are already priced below the $35,000 threshold that most Canadian EV buyers need. The federal rebate program — restored in 2026 at up to $5,000 per vehicle — applies only to cars made in Canada or countries with free-trade agreements. Chinese EVs don’t qualify. But they also don’t need a $5,000 rebate when they’re already $15,000 cheaper than the competition.

The question that no one in the Carney government has answered is this: why would Canadian taxpayers spend $50 billion subsidizing an EV industry and then invite the one competitor that can undercut it on price at every level? The subsidy logic required protection. The tariff cut destroyed the protection. Both decisions were made by the same government — or in the case of the subsidies, by the same party under different leaders.

Ian Lee, associate professor at Carleton’s Sprott School of Business, said after the PBO report that Canada should “go where the puck is going to be, not where the puck is” — investing strategically rather than throwing subsidies at automotive manufacturing where Canada cannot compete internationally. That warning was issued in 2023. In 2026, the puck has arrived: Chinese EVs are entering the market, the subsidized plants are behind schedule, and the break-even timeline that was already 20 years is now functionally indefinite.⁷

Canada committed more than $50 billion in public money to build an electric vehicle industry from scratch. The Parliamentary Budget Officer said the Stellantis and Volkswagen subsidies alone — $28.2 billion — would take 20 years to break even, and that the government’s claim of a five-year payback was unrealistic. That estimate assumed a protected market. In January 2026, the Carney government cut the Chinese EV tariff from 100% to 6.1%. BYD — the world’s largest EV manufacturer, selling vehicles at half the price of anything built in Canada — is now opening 20 dealerships. Chery and Geely are behind them. Stellantis has already moved its Brampton jobs to Illinois. The first Chinese investment proposal was a knock-down kit operation that kept manufacturing in China. The subsidized industry has not finished being built and it is already being undercut by the state-subsidized competition the tariff wall was designed to keep out. Canada bet $50 billion that it could build an EV industry. Then it opened the door to the one country that can destroy it on price. The math never worked at 20 years. It does not work at all now.