Volkswagen CEO Oliver Blume is pressing European policymakers to strengthen the conditions protecting local auto production just as Canada moves toward greater access for Chinese-made electric vehicles. Speaking ahead of the Paris Motor Show, Blume argued that companies must become more competitive but governments also have a responsibility to create a fair industrial framework, including stronger “Made in Europe” incentives.
Across the Atlantic, Ottawa has taken a different path. Canada eliminated its 100% surtax on Chinese EVs in March and replaced it with a controlled annual quota beginning at 49,000 vehicles, while Chinese giant Geely has now confirmed plans to begin Canadian sales in 2027. Blume was addressing Europe rather than Canada, but the parallel exposes the same difficult question: how can governments encourage cheaper EVs and stronger competition without weakening domestic manufacturing?
Blume’s Warning Was Directed at Europe, Not Ottawa
Blume delivered his latest message on October 11 at Volkswagen’s “For Europe” event on the eve of the Paris Motor Show. He described Volkswagen’s restructuring as the largest transformation program in its history and said competitiveness had to be a shared responsibility. Manufacturers, in his view, need to simplify their businesses and build more attractive products, while policymakers establish conditions that prevent European industrial production from being disadvantaged by global competitors benefiting from different economic structures.
That distinction matters when placing his comments beside Canada’s Chinese-EV policy. Blume did not publicly demand that Ottawa restore its former 100% surtax, nor did his remarks specifically single out the Canadian market. His focus was Brussels and the future of European manufacturing. Still, the timing gives the comments particular relevance in Canada. While Europe’s largest automaker asks politicians at home for stronger industrial safeguards, Canada is deliberately allowing more Chinese vehicles into its market. Ottawa calls its approach managed competition; European manufacturers increasingly worry that aggressive Chinese export growth can turn into a damaging price war if domestic producers cannot lower their costs quickly enough.
Volkswagen Wants Protection Tied to Local Production
Volkswagen’s preferred approach is broader than simply raising tariffs. The company has thrown its support behind a “Made in Europe” policy that would link public incentives and other advantages to manufacturing activity inside the European Union. Volkswagen argues that foreign companies should still be able to qualify for assistance, provided they invest locally, employ workers under European conditions, establish regional supply chains and comply with European regulations. The proposal is intended to reward production rather than nationality alone.
Volkswagen, Renault and Stellantis have jointly backed the concept, a significant alliance because together they account for more than 60% of European vehicle production. Ideas under discussion include limiting certain EV purchase incentives, government procurement programs and company-car tax advantages to vehicles satisfying local-content criteria. Blume has also supported regulatory benefits for qualifying European-made EVs. The EU already imposes additional countervailing duties on Chinese battery-electric vehicles after concluding that China’s industry benefited from unfair subsidies. Current rates vary by manufacturer, including 17% for BYD, 18.8% for Geely and 35.3% for SAIC, on top of the EU’s normal vehicle import tariff.
Chinese Brands Are No Longer a Small European Rival
The urgency behind Volkswagen’s position becomes clearer in the numbers. A record 20 Chinese brands are expected at the 2026 Paris Motor Show, twice as many as appeared at the event in 2024. Companies including BYD and Chery will share the floor with newer international challengers such as Aito and Avatr. European automakers are responding with lower-priced electric models of their own, but Chinese companies are arriving with increasingly broad portfolios covering battery EVs, plug-in hybrids and conventional vehicles.
Schmidt Automotive Research data cited by Reuters put Chinese brands at 10.7% of the European vehicle market during the second quarter of 2026, up from 5.7% only a year earlier. Their rise has been even more dramatic in Western European plug-in hybrids, where their share surpassed 26% in Q2, compared with just 2.2% two years earlier. Existing EU tariffs primarily targeted battery-electric cars, encouraging several Chinese manufacturers to expand plug-in-hybrid offerings instead. That pressure prompted a new EU-China understanding intended to roughly halve Chinese hybrid exports to Europe, an agreement Blume described as an important move toward establishing a more level competitive field.
Canada Replaced a 100% Tariff Wall With a Controlled Opening
Canada was once moving in almost the opposite direction. In October 2024, Ottawa imposed a 100% surtax on Chinese-made EVs on top of the existing 6.1% most-favoured-nation tariff. The federal government argued that Chinese state-directed overcapacity and subsidies threatened Canadian automotive workers, EV investments and the deeply integrated North American manufacturing system. The measure broadly aligned Canada with a tougher U.S. approach to Chinese automotive imports.
That policy changed dramatically after Prime Minister Mark Carney reached a new economic arrangement with China in January 2026. Beginning March 1, Canada eliminated the 100% surtax and replaced it with a country-specific quota. The first-year allowance is 49,000 Chinese EVs at the normal 6.1% tariff, and the quota is scheduled to expand by 6.5% annually. Imports require permits, and once the annual ceiling is reached, additional qualifying vehicles cannot simply enter at the preferential rate. Ottawa stresses that the initial quota represents less than 3% of Canada’s new-vehicle market, meaning the policy is better described as a managed opening than unrestricted access.
Ottawa Is Deliberately Making Room for Lower-Priced EVs
Affordability is built directly into Canada’s agreement. Beginning in the second quota year, part of the allowance must be reserved for Chinese EVs with a free-on-board value of C$35,000 or less. That share is scheduled to increase until half the quota is reserved for vehicles meeting the threshold by 2030. The C$35,000 figure refers to the value used for trade purposes rather than necessarily the final retail price Canadian consumers will see after transportation, tariffs, dealer costs and taxes.
The federal government argues that greater access to inexpensive vehicles can help broaden EV adoption while encouraging Chinese companies to invest in Canadian manufacturing through partnerships. There is a real market to compete for. Statistics Canada recorded 58,811 new zero-emission-vehicle registrations during the second quarter of 2026, up 26.7% from a year earlier and equal to 10.7% of all new registrations. Battery-electric registrations jumped 37.4% year over year. Those numbers remain well below a majority of the Canadian vehicle market, leaving manufacturers considerable room to attract consumers who have so far remained with gasoline vehicles or conventional hybrids—especially if lower purchase prices become available.
Geely’s Arrival Turns Trade Policy Into Showroom Competition
Canada’s policy shift is no longer theoretical. On October 9, Geely Auto formally announced its entry into the Canadian market, saying it has established a local team and is developing a retail and service network ahead of its first vehicle sales in 2027. The company has not yet revealed which models will arrive or what they will cost, making it premature to claim that a particular inexpensive Chinese EV is about to appear at Canadian dealerships.
Geely nevertheless arrives with enormous scale. The company says Geely Auto Group sold more than 3.02 million vehicles worldwide in 2025, including nearly 1.69 million new-energy vehicles. It also enters Canada with indirect familiarity through the wider Geely corporate universe, which includes brands such as Volvo, Polestar and Lotus. Other Chinese manufacturers have been examining the opportunity as well. Reuters reported earlier in 2026 that BYD, Chery, Changan and Geely-owned Lotus were among companies pursuing various stages of Canadian entry, certification, dealerships or market preparation. Canada may therefore become one of the first major North American testing grounds for direct competition between established Western manufacturers and China’s fast-growing domestic automakers.
Europe and Canada Are Making Different Bets on the Same Problem
The European and Canadian strategies can look contradictory at first. Europe is strengthening local-content incentives and maintaining anti-subsidy duties, while Canada has removed its extraordinary 100% surtax and created room for Chinese imports. Yet neither market is simply choosing between open trade and complete protection. Europe continues to permit Chinese-made vehicles, and Canada has imposed a strict quota rather than opening the border without limits.
The difference is one of emphasis. European policymakers are under growing pressure to protect an enormous domestic auto-manufacturing base as Chinese brands gain market share quickly. Canada also wants to preserve assembly plants and a developing EV supply chain, but Ottawa sees selective Chinese competition and investment as a potential tool for diversification, lower vehicle prices and reduced economic dependence on the United States. The federal government says the Chinese quota could help stimulate joint ventures and domestic investment, though those investments are an expectation rather than a guaranteed result. Canada’s experiment will therefore be judged partly on whether Chinese brands merely import vehicles or eventually put meaningful capital, technology and employment into the country.
Volkswagen Has Billions Tied to Canada’s EV Manufacturing Strategy
Volkswagen has a direct stake in how Canada’s EV industrial policy develops. Its battery subsidiary PowerCo is building a massive cell factory in St. Thomas, Ontario. Volkswagen originally announced investment of up to C$7 billion in the site, describing it as the company’s first overseas battery gigafactory. At full expansion, the facility was designed for capacity of up to 90 gigawatt-hours annually and potentially as many as 3,000 skilled direct jobs, with its batteries supporting Volkswagen Group electric vehicles in North America.
The timetable has become more cautious. PowerCo announced in September that St. Thomas is now expected to begin operations in 2029, two years later than originally planned. The company said the adjustment would allow it to align production with changing demand, Volkswagen’s longer-term strategy and next-generation battery technology while preserving flexibility to scale. Construction is continuing, and PowerCo hired EllisDon as general contractor. The delay highlights precisely why Chinese competition matters to Volkswagen: the group is spending billions to localize battery production while simultaneously facing rivals whose rapid product development and lower costs are reshaping EV pricing around the world.
Volkswagen Is Also Deeply Entwined With China
Volkswagen’s position cannot be reduced to a simple Europe-versus-China conflict. China remains an essential market and technology base for the German group. Volkswagen has adopted an “in China, for China” strategy and is launching a wave of locally developed intelligent electric vehicles. Its partnership with Chinese EV company Xpeng has helped accelerate development timelines, and Volkswagen began presales in September for its second jointly developed model, the ID. UNYX 09.
The relationship creates an unusual tension. Volkswagen is competing intensely against Chinese manufacturers, collaborating with Chinese companies and producing some vehicles in China at the same time. In February, the European Commission approved a special price undertaking for the China-built CUPRA Tavascan produced by Volkswagen Anhui. Under that arrangement, the vehicle can avoid normal countervailing duties if Volkswagen complies with a minimum import price, volume restrictions and European investment commitments. That example closely resembles the philosophy behind Blume’s broader position: cross-border competition is acceptable, but market access should come with conditions that protect industrial value creation at home.
Canadian Buyers Could Become the Ultimate Test of Both Strategies
For consumers, additional competition could be valuable if Chinese entrants deliver lower prices, longer equipment lists or faster improvements in battery technology. Established manufacturers would face pressure to respond with better-value products, much as Chinese competition has already pushed European companies toward more affordable EVs. But lower showroom prices are only one part of the equation. Canadian buyers will also judge unfamiliar brands on cold-weather performance, parts supply, repair networks, resale values, software support, warranty service and long-term reliability.
For policymakers, the stakes are larger. Canada’s government wants affordable EV imports while maintaining auto assembly, battery production and domestic employment. Volkswagen wants the industrial investments made by established manufacturers to matter when governments design incentives and trade rules. Chinese automakers want access to markets where they believe their cost and technology advantages can win buyers. Those objectives can coexist only if Canada’s managed-opening strategy delivers more than imported vehicles. Blume’s warning from Europe therefore carries an indirect lesson for Ottawa: competition itself may be healthy, but the long-term outcome depends on whether policy encourages companies competing for Canadian customers to build, invest and create value in Canada as well.
