Chinese EVs' North American Market Expansion: Analysis of Competitive Landscape and Investment Impacts

Based on the latest market dynamics and policy changes, I have prepared this in-depth investment analysis report for you.

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On January 16, 2026, Canadian Prime Minister Mark Carney announced in Beijing that tariffs on Chinese electric vehicles would be drastically reduced from 100% to

(Most-Favored-Nation tariff rate), and Chinese electric vehicles would be allowed to enter the Canadian market [1]. This volume accounts for less than 3% of Canada’s new car market, with over 50% being affordable models priced below CAD 35,000 [2].

The Ontario provincial government simultaneously proposed a “Build Here or Stay Out” strategy – if Chinese automakers wish to enter the Canadian market, they must establish local factories, hire union-certified workers, share technology, and collaborate with local component enterprises [3].

The Office of the United States Trade Representative previously stated clearly that Canada’s decision to allow Chinese electric vehicles into its market is a “mistake” that could harm Canada’s domestic auto industry. This divergence reflects the difficulty of coordinating trade policies between the U.S. and Canada [1].

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Metric	BYD (2025)	Tesla (2025)	Change
Pure Electric Vehicle Sales	2,256,700 units	1,636,100 units	BYD leads by 620,000 units
YoY Growth Rate	+27.86%	-8.6%	Diverging Trends
Global Market Share	~19%	~14%	Widening Gap

BYD’s overseas sales reached

in 2025, accounting for 22% of its total sales. Citibank predicts that BYD’s overseas sales will reach in 2026, with total sales expected to exceed , further expanding its lead over Tesla [4][5].

• 2024 Data
  : Chinese pure electric vehicle sales account for nearly 60% of the global total
• In 2025, China’s global auto exports surpassed Japan for the first time
  , making it the world’s largest auto exporter [6]
• Spanish Market
  : In December 2025, BYD surpassed Tesla with significant sales growth [7]

The North American market is undergoing a “rebalancing” adjustment:

Metric	Current Status	Trend
U.S. EV Retail Penetration (2025Q4)	Dropped from 9.8% to 6.2%	Continuing Decline
Average EV Transaction Price	Risen to USD 53,300	Higher Purchase Threshold
Tax Credit Policy	Terminated	Lost Fiscal Support

• Ford
  : Recorded a USD 19.5 billion impairment, discontinued the F-150 Lightning pure electric pickup, and shifted to extended-range hybrid vehicles [8]
• GM
  : Recorded a USD 7.1 billion loss in Q4 2025, restarted plug-in hybrid technology [9]
• Stellantis
  : Bets on large-battery extended-range technology; the Ram 1500 Ramcharger boasts a combined range of 1,100 km [10]

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• USD 19.5 billion pre-tax impairment (approximately USD 8.5 billion directly related to EV projects)
• Terminated joint battery business with SK-On (involving approximately USD 6 billion)
• Raised 2025 adjusted EBIT forecast to USD 7 billion (supported by strong core business) [8]

• Recorded a USD 7.1 billion loss in Q4 2025
• Mainly due to impaired value of investments in battery factories and EV assembly lines [9]

• YoY delivery decline for two consecutive years (1,636,100 units delivered in 2025, down 8.6% YoY)
• Carbon credit revenue dropped 44% YoY in Q3 2025
• Wall Street’s 2026 sales forecast has fallen to approximately 1.8 million units (compared to the 3 million unit forecast two years ago) [5]

North American automakers are shifting from a “politically correct” pure electric route to a “balance sheet”-oriented approach:

1. Diverging Technical Routes
   : Shifting from a single pure electric focus to a diversified route of “pure electric + plug-in hybrid + extended-range hybrid”
2. Cost Structure Disadvantage
   : North American EV costs are 30%-50% higher than those in China
3. Policy Dependence
   : The market shrank rapidly after the expiration of IRA subsidies
4. Supply Chain Restructuring
   : Forced to reduce reliance on Chinese supply chains, but localization costs remain high [6]

Automaker	Short-Term Risk	Mid-Term Opportunity	Long-Term Competitiveness	Rating
Ford	High (Asset Impairment)	Medium (Hybrid Transformation)	Weak (Legacy Automaker Burden)	Wait-and-See
GM	High (Huge Losses)	Medium (Plug-in Hybrid Restart)	Weak (Ultium Platform Under Pressure)	Wait-and-See
Tesla	Medium (Sales Decline)	High (Robotaxi, AI)	Strong (Technological Leadership)	Hold
Rivian	Extremely High (Sustained Losses)	High (Niche Market Focus)	Medium (Capital Pressure)	Risk Preference

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Chinese automakers are using Mexico to “curve into” the North American market:

Automaker	Mexico Layout	Production Capacity/Progress
BYD	Dealer Network	Aggressive 2025 sales target
Chery	Factory Site Selection	Radiates to the North American market
Leapmotor	Cooperation with FAW	Technology export model [11]

• Restrictions under the U.S. “Foreign Entity of Concern (FEOC)” clause
• Mexico will raise tariffs on Asian imports starting in 2026 [12]
• Rules of Origin constraints under the U.S.-Mexico-Canada Agreement (USMCA)

• BYD’s Hungarian plant with an annual capacity of 300,000 units (began production at the end of 2025) [6]
• XPeng partners with Austria’s Magna to achieve localized mass production
• CATL and Stellantis jointly build a lithium-iron-phosphate (LFP) battery factory in Spain

• First vehicle rolled off the line at BYD’s Brazilian plant
• Geely and Renault established a joint venture in Brazil
• Linglong Tire became the first Chinese tire enterprise to build a factory in Brazil [6]

Sino-foreign cooperation in 2025 features “two-way empowerment, integration of whole vehicle and component enterprises”:

• Bosch and Horizon Robotics
  : Jointly developing L2+ intelligent driving platforms
• Toyota, Nissan and Huawei
  : Collaborating to launch models equipped with HarmonyOS
• Honda and Momenta
  : Jointly developing intelligent driving solutions [6]

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1. Canadian Market
   : Chinese EVs enter at a 6.1% tariff, with annual sales of approximately 50,000 units (accounting for 3% of the market)
2. U.S. Market
   : Maintains high tariff barriers; Chinese automakers penetrate via Mexican localization
3. Technological Gap
   : China’s leading advantages in battery costs (already below USD 100/kWh) and intelligentization continue to expand

• If U.S. policies ease, Chinese EVs are expected to capture 10%-15% of the North American market within 3-5 years
• Directly impacts Tesla’s high-end market and Ford/GM’s mid-to-low-end models

• Mexico is included in the restricted scope; Chinese automakers shift focus to Southeast Asian and South American markets
• North American automakers gain a 5-8 year transformation buffer period

• Battery Materials
  : Leading enterprises in lithium battery cathode/anode materials and separators (tight supply-demand dynamics, rising volume and profits) [13]
• Intelligentization
  : Horizon Robotics, Huawei Intelligent Driving Supply Chain
• Overseas Supporting Facilities
  : Localized suppliers in Mexico and Hungary

• Facing dual pressure from Chinese supplier competition and automakers’ cost reduction efforts
• Giants such as Bosch, ZF, and Continental have laid off over 46,000 employees in total [6]

Theme	Target Type	Risk Level
Globalization of Chinese EVs	BYD, CATL	Medium-Low
Beneficiaries of North American Automaker Transformation	Ford, GM Hybrid Suppliers	Medium-High
Intelligent Driving Technology	Horizon Robotics, Huawei Ecosystem	Medium
Mexican Supply Chain	Localized Chinese Enterprises in Mexico	Medium-High

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• Uncertainties in China-U.S. trade policies (combination of Section 301 and Section 232 provisions)
• Possibility of USMCA revisions
• Risk of policy reversals in Canada

• Breakthroughs in solid-state battery technology may reshape the competitive landscape
• Potential competition from hydrogen fuel cell vehicles
• Uncertainty in the timeline for L4 autonomous driving

• Sustained weak demand for EVs in North America
• Fluctuations in battery raw material prices
• Consumer acceptance of Chinese brands [4]

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1. Irreversible Competitive Landscape
   : The global competitive advantages of China’s EV industry chain have been established, and North American automakers cannot match China’s cost competitiveness
2. Diverging Investment Value
   : Traditional North American automakers face long-term downward pressure, while Tesla relies on AI narratives to support its valuation
3. Persistent Policy Game
   : Canada’s tariff reduction does not signal a shift in U.S. policy, and coordination between the U.S. and Canada remains challenging
4. Diversified Layout Paths
   : Chinese automakers penetrate the North American market via multiple tracks in Mexico, Europe, and South America

Risk Preference	Recommended Allocation
Conservative	Hold CATL, BYD (A-shares/Hong Kong stocks); avoid traditional North American automakers
Moderate	Core allocation to China’s EV industry chain; moderate allocation to Tesla
Aggressive	Focus on Mexican supply chain enterprises and beneficiaries of North American automaker transformation

• Actual achievement of BYD’s 2026 overseas sales target
• Changes in U.S. policies towards Mexico
• Commercialization progress of Tesla’s Robotaxi
• Sales data of hybrid models from North American automakers
• Timeline for battery costs to drop to USD 80/kWh

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[1] Securities Times - Canada Cuts Tariffs on Chinese Electric Vehicles from 100% to 6% (https://www.stcn.com/article/detail/3597997.html)
[2] EET China - Canada Cuts Tariffs on Chinese Electric Vehicles from 100% to 6% (https://www.eet-china.com/mp/a468365.html)
[3] Gasgoo - Canada Faces EV Policy Dilemma: Collision Between High Tariff Barriers and Global Industrial Realities (https://m.gasgoo.com/news/70442608.html)
[4] Huxiu - BYD’s Pure Electric Sales Surpass Tesla: How Overseas Media and Netizens React? (https://www.huxiu.com/article/4824707.html)
[5] CLS - Tesla’s Full-Year Delivery Data Released: Loses Global EV Sales Crown by a Wide Margin (https://m.cls.cn/detail/2246491)
[6] Sina Finance - 2025 Auto Industry: Tale of Two Worlds: China Leads in Intelligent Driving While Global Automakers Undergo Major Restructuring (https://finance.sina.com.cn/stock/t/2025-12-31/doc-inheshqt5300273.shtml)
[7] Guancha - Spanish EV Market in December: Tesla Plunges 44%, Surpassed by BYD (https://m.guancha.cn/GCXchanyexingwen)
[8] Autohome - Ford Adjusts Electrification Strategy at the Cost of USD 19.5 Billion, Shifts Focus to Hybrid Vehicles (https://chejiahao.autohome.com.cn/info/24593167)
[9] Moomoo - General Motors Records USD 7.1 Billion Loss Due to Scaled-Back EV Business Plans (https://www.moomoo.com/hans/news/post/63815638)
[10] EET China - It’s the End of 2025, How is North American Auto Electrification Progressing? (https://www.eet-china.com/mp/a461636.html)
[11] Guancha - FAW Officially Acquires 3.7 Billion CNY Stake in Leapmotor, No Impact on Leapmotor’s Control (https://m.guancha.cn/GCXchanyexingwen)
[12] Guancha - Directly Impacting Over 2.6 Billion CNY, Mexico Raises Tariffs on Asian Imports Starting January 1 (https://m.guancha.cn/GCXchanyexingwen)
[13] Securities Times - Positive News for Chinese Electric Vehicles (https://www.stcn.com/article/detail/3597997.html)

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