Source: BYD

Canada opened the door to Chinese-made electric vehicles in January 2026, slashing tariffs from 100 per cent to 6.1 per cent under a new trade arrangement signed by Prime Minister Mark Carney and Chinese President Xi Jinping in Beijing on January 16. The deal permits up to 49,000 Chinese-built EVs annually at most-favoured-nation tariff rates, rising to 70,000 vehicles by 2031, with at least half required to carry an import price below CA$35,000 (c. $26,000) by 2030. It has since triggered a sharp and still-unresolved debate about whether those vehicles bring surveillance risks alongside their lower sticker prices.

The security concerns centre on the nature of the modern connected vehicle itself. According to CBC News, cybersecurity experts note that contemporary EVs function as sensor-rich platforms equipped with microphones, cameras, 5G connectivity, and persistent links to manufacturer servers — capable of capturing geolocation, driving behaviour, smartphone contacts, and real-time images.

David Masson, vice-president at AI cybersecurity firm Darktrace, described all modern vehicles as "basically computers on wheels." The concern specific to Chinese manufacturers is where that data ultimately flows, and whether Beijing's national intelligence laws could compel companies to hand it over.

Ontario Premier Doug Ford became the most vocal political critic of the deal, calling the vehicles "spy vehicles" and invoking the spectre of phone call interception. Conservative leader Pierre Poilievre labelled them "roving surveillance systems." Brian Kingston, chief executive of the Canadian Vehicle Manufacturers' Association, drew a pointed parallel to social media regulation: "If a social media platform is considered a threat to Canadians, I find it surprising that a connected vehicle is now even allowed in."

The federal government has pushed back on those characterisations. Public Safety Minister Gary Anandasangaree testified before a parliamentary committee that Ottawa would put safeguards in place to ensure Chinese EVs could not "transmit information" back to China, adding that the measures were "very much in line with our national-security priorities."

In a separate interview, Anandasangaree said the federal government simply does not share Ford's concerns, pointing to Canadian standards compliance as sufficient protection. Finance Minister François-Philippe Champagne described Canada's approach as engaging with China "but with eyes wide open," with "guardrails" and investment reviews in place.

Security experts are less reassured. Neil Bisson, director of the Global Intelligence Knowledge Network and a retired Canadian Security Intelligence Service officer, warned that connected vehicles could become gateways into critical infrastructure, including power grids and communications systems. Dan Rogers, director of CSIS, confirmed to MPs that China, India, and Russia remain the main foreign-interference actors in Canada.

David Shipley, CEO of Beauceron Security, offered a broader caution: sophisticated state-sponsored actors do not limit their surveillance to vehicles of their own manufacture but can exploit any internet-connected car. His proposed remedy — a consumer bill of rights for connected vehicles — would require mandatory security updates, rigorous cyber-testing, and the ability to disconnect core vehicle functions from the internet.

A key structural gap underlines the entire debate. Canada's primary private-sector privacy statute, the Personal Information Protection and Electronic Documents Act, dates to 2000 and has not been substantively modernised since. It contains no provisions specific to connected vehicles and no mechanism to restrict data transfers to jurisdictions — including China — that offer materially weaker privacy protections.

Guillaume Beaumier, an assistant professor in political science at l'École nationale d'administration publique, has argued that the real deficiency is not the national origin of the vehicles but Canada's failure to update its digital rulebook for the era of connected mobility. He suggests that geofencing restrictions near sensitive sites — echoing China's own 2021 curbs on Tesla around military facilities — and mandatory data-localisation rules would do more than blanket bans.

The geopolitical context shapes the entire episode. Carney's deal with Beijing is explicitly framed as a hedge against US President Donald Trump's tariff war, which has imposed levies of up to 25 per cent on Canadian-made vehicles and disrupted the integrated North American automotive supply chain.

General Motors (NYSE: GM) cancelled its BrightDrop EV programme in Canada, and Stellantis (NYSE: STLA) shifted Jeep Compass production to Illinois after the US tariffs took effect. Under the Biden administration, the US Department of Commerce finalised rules in January 2025 — effective March 17, 2025 — prohibiting Chinese-linked vehicle connectivity software from model year 2027 and Chinese-linked hardware from model year 2030. Canada has introduced no equivalent framework.

Consumer sentiment has not fully tracked the political rhetoric. A Leger poll conducted January 30 to February 2, 2026 found 61 per cent of Canadians in favour of allowing Chinese EVs into the market. Among those who expressed concerns, vehicle quality and impact on the domestic auto industry each registered at 38 per cent, ahead of privacy and security at 33 per cent. Shoppers at the Canadian International AutoShow in February described data collection as a universal problem of connected devices — not one unique to Chinese-branded cars.

BYD (HKG: 1211), the world's largest EV manufacturer by volume, is widely expected to be among the first Chinese brands seeking Canadian certification under the new quota. Transport Canada has indicated that vehicle certification for new Chinese entrants will be completed within eight weeks. Whether the federal government's promised safeguards will be specified in regulation, or whether they amount to a standard compliance declaration, remains the outstanding question that security researchers say Canada cannot afford to leave unanswered.