Canada now regulates the arrival of electric vehicles assembled in China, but current rules do not limit the amount of Chinese components that models built elsewhere can contain. As a result, several electric vehicles sold here contain batteries, motors or other parts sourced from China.
And these vehicles are eligible for Canada's current EV incentives offered by the federal governments, as long as they are priced under $50,000 CAD.
Rules based on assembly location
The Canadian federal incentive program, the Electric Vehicle Affordability Program (EVAP), restricts its rebates to vehicles manufactured in countries with which Canada has a free trade agreement, and that includes the U.S. The restriction excludes vehicles assembled in China, but here’s the catch: it sets no limits on the origin of EVs’ components.
Therefore, a vehicle built in an eligible country (like the U.S.) and which sells for $50,000 or less in Canada can qualify for up to $5,000 in federal incentives, even if a significant portion of its value comes from Chinese parts.
According to an analysis published by Automotive News Canada, this dependency affects models assembled in North America, Japan and South Korea. Some of these models may qualify for the federal EV incentive despite carrying a high proportion of Chinese content.
Exhibit A: The Chevrolet Bolt
The 2027 Chevrolet Bolt is assembled in Kansas, in the U.S., but its motor, drive unit and battery originate from China. According to information displayed on the vehicle's U.S. window sticker, Chinese components represent 51% of its total value. Only 17% of its content comes from the United States or Canada.
General Motors Canada has not confirmed whether models destined for the Canadian market use the exact same components, but it’s considered very likely the makeup of the vehicles sent here is virtually identical.
And yet, the 2027 Chevrolet Bolt is eligible for the federal EV incentive.
GM frames this supply-chain strategy as a temporary measure allowing it to market its most affordable electric vehicle. The automaker says it continues to invest in battery manufacturing, critical materials and advanced technologies across North America.
The situation differs for other GM electric vehicles. The Chevrolet Equinox EV and Cadillac Lyriq each feature 43 percent U.S. or Canadian content, compared to 18 percent sourced from China, according to data submitted to the National Highway Traffic Safety Administration (NHTSA).
It’s not just General Motors
Japanese and South Korean automakers are in a similar situation. According to NHTSA data reported by Automotive News Canada, the 2026 Toyota bZ and C-HR contain 20 percent and 30 percent Chinese parts, respectively. The figure stands at 20 percent for the 2026 Kia Niro.
In the case of the 2025 Hyundai Kona Electric, half of its components came from China. (The model, recall, was withdrawn from the U.S. market for 2026, but it remains available in Canada).
The percentages may actually understate China's true prominence in automotive supply chains. Mark Wakefield, global co-leader of the automotive practice at AlixPartners, notes that a part's declared origin typically corresponds to the country where it was processed or assembled. Raw materials extracted elsewhere can thus be refined in China and subsequently integrated into a battery cell manufactured in South Korea without being tallied as Chinese content.
For Flavio Volpe, president of the Automotive Parts Manufacturers' Association, this situation will force Ottawa to better define what truly constitutes a Chinese vehicle. It also highlights the scale of the challenge facing North America in developing a complete electric supply chain, from mineral extraction to final assembly.