In case you didn’t hear the news, America’s neighbor to the north has greenlit the import of thousands of Chinese-made electric vehicles without the 100% tariffs that have limited their growth in that country over the past few years. And while Canadian consumers may be amped about cheaper EVs, auto industry officials are sounding the alarm.
The latest one to do so is General Motors CEO Mary Barra, whose own company—like the rest of the American auto industry—relies heavily on Canada’s intertwined manufacturing sector. She joins U.S. lawmakers in warning that Canada’s move could be detrimental in the long run.
Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Also on deck: AI data centers are expected to fuel the next chip shortage and BYD plans to sell even more cars outside of China. Let’s jump in.
25%: Cheap Chinese EVs Present A ‘Slippery Slope,’ Says GM CEO
Photo by: Patrick George
Canada’s recent deal to let in an allotment of up to 49,000 Chinese-built EVs each year is, according to General Motors Chief Executive Mary Barra, a risk to North American auto manufacturing.
The deal will reduce the effective tariff rate of the imported vehicles from a prohibitive 100% down to a much more palatable 6.1%. This might seem like a tidal wave on the U.S. auto industry’s imports to Canada, but in reality, it represents just 3% of Canada’s total annual vehicle sales.
Still, Barra insists that the move is shortsighted and could lead to much bigger threats to established players. Here’s an exclusive from the Wall Street Journal:
Barra said Canada’s China deal, announced earlier this month, is counter to building a strong North American industrial base and to protecting jobs and national security on the continent.
“I can’t explain why the decision was made in Canada,” Barra said during an all-hands meeting with employees Tuesday. “It becomes a very slippery slope.”
She noted that Chinese automakers benefit in China from high tariffs imposed on importers and on technology restrictions that prevent other players from entering their market.
By the end of the decade, at least half of the EVs imported would be required to have a price of $35,000 Canadian dollars, equivalent to roughly $26,000, Prime Minister Mark Carney’s office said. Canada will work with Chinese auto manufacturers on timely vehicle certifications to ensure they meet the country’s motor-vehicle safety standards.
While Barra didn’t say this out loud, it’s clear that the value proposition represented by Chinese automakers is a big part of these warnings from across the industry.
Carney’s pricing goals squarely target the affordable end of the market, which American automakers aren’t exactly dominating today. But at least one critic hit back at Barra from Automotive News Canada, saying this is at least a partially self-inflicted wound because GM has been winding down so many investments in the Canadian auto sector as of late:
It’s not lost on me—or likely the thousands of GM Canada employees—that she made the comments three months after GM killed the BrightDrop EV commercial van line, which led to the idling of the GM CAMI plant in Ingersoll, Ont. And the comments came just three days before the automaker ends the midnight shift at its Oshawa Assembly Plant.
And still, she just “can’t explain why” Canada would look for investment elsewhere—even if elsewhere is China? It’s because there’s been no investment from General Motors of late. Indeed, GM has steadily eroded its manufacturing footprint in Canada, shuttering plants over the last several years.
None of GM’s decisions seems geared toward building a strong North American industrial base. They aren’t actions taken when protecting jobs, are they?
Meanwhile, Canada will also work to ensure that these vehicles meet the country’s safety standards, which are aligned with U.S. safety standards. This means that in many cases, cars sold in Canada could easily cross into the U.S.—especially when they’re also selling like crazy in Mexico. One way or another, it feels like the dominoes are starting to fall here.
50%: EVs Are Getting More Expensive To Build. Blame AI Data Centers
Photo by: InsideEVs
Just when you thought that the COVID-era chip shortage was a thing of the past, the auto industry has a new enemy: giant, humming AI data centers.
Now, as much as cars are becoming more like computers on wheels, Silicon Valley doesn’t care about your new crossover or even software-defined vehicles. They want the memory chips that help to power the electronics inside these new tech-heavy cars. With the AI boom, tech giants want as much as they can grab (even if they aren’t going to use it)—and they’re willing to pay a lot more than car companies for it.
S&P Global explains it in a report:
The chip shortage resurfaced in late 2025, this time centered on dynamic random-access memory (DRAM) memory chips, as soaring AI data center demand outstripped supply.
Automotive clients, unable to match the profit margins offered by data center buyers, faced steep price hikes and the looming need to redesign vehicle electronics around newer memory technologies by 2028.
Supply chain security concerns have extended to rare earth materials, which are essential for electric motors, with mainland China’s dominance prompting a search for alternative sources and technologies
Car companies aren’t even using the most cutting-edge memory, either. Cars generally rely on older, slower memory technology, however. That means the manufacturing capacity of even the largest chip companies is becoming overwhelmed to meet the demand of AI customers with virtually unlimited funds seeking more advanced hardware.
Analysts believe that this could begin to affect vehicle output by the second quarter of 2026. That doesn’t mean that car production will come to a grinding halt. But if you look back to the last big semiconductor crunch, it could spell another major shortage on all automotive fronts.
75%: BYD Plans A Huge Uptick In Foreign Sales This Year
Photo by: BYD
Chinese auto giant BYD has been doing numbers lately. In China, the brand has been well-received, though an industry-wide slump (which is the result of addressing a much larger problem) means an expected dip at home.
To make up for that slump, BYD says that it expects to expand its sales outside of China by nearly 25% this year. And that all starts with Europe. The South China Morning Post tells all:
The Shenzhen-based company, the world’s largest builder of pure electric and plug-in hybrid vehicles, expected to sell 1.3 million cars this year outside mainland China, up 24.3 per cent from 2025, said Li Yunfei, general manager of branding and public relations, in a media briefing on Saturday.
“We will launch more new models in some lucrative markets, which will include our Denza-branded vehicles,” he said. “Our network of dealers will be further expanded.”
Believe it or not, this is actually a reduction of what BYD had originally planned.
According to Bloomberg data, Citigroup previously said that BYD told investors that it planned to sell between 1.5 and 1.6 million units outside of China back in November. It’s not clear what caused BYD to revise that number, especially as news that Canada will be opening its doors to Chinese-built cars.
So now BYD has its sights set on doubling its dealer network in Europe. The writing on the walls doesn’t look great for legacy automakers, even if some aren’t as worried as others.
100%: Would You Buy A Cheap Chinese EV?
Photo by: Xiaomi
Chinese EVs are both good and cheap. It’s the reason that many legacy Western automakers have had to sell their experience rather than the latest tech. So now that America is being squeezed on virtually all sides by Chinese car companies, the very real “existential threat,” as Ford’s CEO calls it.
Are you ready? More importantly, are you willing to buy one?
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