I recently noticed an interesting market shift. This week, Tesla started selling the cheapest Model 3 ever in Canada, priced at CAD 39,490 (about USD 29,000), and this batch of cars was shipped from the Shanghai factory.

There’s a story behind this. In 2024, Canada imposed a 100% tariff on Chinese electric vehicles, forcing Tesla to switch to US-made models. But in early 2025, Canada added a 25% tariff on US cars, causing the Model 3 price to spike to CAD 80,000. It wasn’t until earlier this year that Canadian Prime Minister Mark Carney reached an agreement with Beijing, reducing the Chinese electric vehicle tariff from 100% to 6.1%, which opened the door. Of course, there’s a cap—no more than 49,000 units imported annually.

Tesla is the first to take advantage of this. The new Model 3 has a single-charge range of 463 kilometers, accelerates from 0 to 100 km/h in 4.2 seconds, and the performance version’s price also dropped 17%, from CAD 89,990 to CAD 74,990. The price difference is CAD 35,500, but the basic model is already sufficient, with comparable range and speed. Compared to the US version’s base price of USD 42,490, Canadian consumers save quite a bit, with the difference mainly due to the manufacturing location and applicable tariffs.

However, Canadian buyers face a restriction: vehicles manufactured in Shanghai do not qualify for the CAD 5,000 electric vehicle subsidy, which only applies to vehicles produced in countries with trade agreements with Canada. Even so, CAD 39,490 is the lowest price. The first deliveries are expected to start in May or June.

Interestingly, Chinese automakers are accelerating their moves. Xiaomi only started making cars last year, and this year plans to deliver 550,000 units. Their Beijing factory produces a new car every 76 seconds. They’ve also established a research center in Munich, led by a former BMW executive, preparing to enter the European market by 2027. Xiaomi’s models are priced between EUR 27,000 and EUR 38,000, and last year, they ranked first in sales among similarly priced sedans in China.

BYD’s plans are even more aggressive, aiming to open 20 stores in Canada, with import limits increasing from 49,000 to 70,000 units by 2030. It seems that tariff agreement adjustments have truly opened the doors for Chinese automakers in Canada and Europe. This development warrants ongoing attention.