Canada has replaced the 100 % tariff on Chinese electric vehicles with a 6.1 % duty that is capped at 49,000 vehicles per year, rising to 70,000 over five years. The change is part of a broader trade agreement that also sees China lowering tariffs on Canadian canola seeds, marking a significant policy shift that diverges from the United States’ stance on Chinese EV imports.
The tariff reduction directly lowers the cost of importing XPeng vehicles into Canada, improving the company’s price competitiveness. XPeng’s Q3 2025 results—revenue of 20.38 billion RMB, a record 20.1 % gross margin, and a narrowed net loss of 0.38 billion RMB—demonstrate strong operational execution. Management projects 125,000‑132,000 vehicle deliveries and 21.5‑23.0 billion RMB in revenue for Q4 2025, with a goal of breaking even in that quarter.
Why the tariff change matters is that the 6.1 % duty, while still low, is limited by the volume cap, giving XPeng a controlled entry point into the Canadian market. The reciprocal concessions on Canadian agricultural products reinforce the trade partnership and provide a broader economic context for the tariff shift.
Canadian auto‑industry stakeholders have expressed concerns about potential job impacts, yet the policy aims to increase consumer choice and affordability, targeting 50 % of imported EVs priced below CAD 35,000 within five years. The cap ensures that domestic manufacturers are not immediately displaced while still opening the market to new entrants.
Strategically, XPeng’s global expansion plan—aiming for half of its sales abroad within ten years—aligns with this tariff reduction. Lower import costs and a defined volume cap enable XPeng to establish a localized supply chain in North America, positioning it to compete more effectively against domestic and other international EV makers.
In summary, Canada’s tariff cut is a material regulatory shift that could reshape the Canadian EV landscape and accelerate XPeng’s growth trajectory in the region.
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