New York, Jan 16, 2026, 19:20 ET
- Canada agreed to steeply reduce tariffs on a set quota of Chinese EV imports, triggering swift criticism from U.S. officials.
- Germany is considering new EV subsidies tied to income, potentially reaching around $7,000, but details won’t be released until Monday.
- U.S. auto safety officials have extended the deadline for Tesla to respond to inquiries in their Full Self-Driving investigation.
Canada’s choice to slash tariffs on Chinese-made electric vehicles thrust trade policy back into the spotlight for EV stocks on Friday. This reverses a major 2024 protectionist measure and could deepen the North American divide over Chinese auto imports.
The move comes as governments scramble to boost electric vehicle demand, which has lagged behind forecasts and squeezed automakers’ profits. Germany, for instance, is working on a fresh subsidy plan targeting low- and middle-income households.
U.S. officials cautioned Canada that the deal might backfire, stressing that Chinese EVs cleared for Canada won’t be allowed into the U.S. This highlighted the political risks looming over EV supply chains and sales strategies.
Prime Minister Mark Carney announced Canada will initially permit up to 49,000 Chinese electric vehicles under a 6.1% tariff, applied on “most-favoured-nation” terms—the usual rate for most trading partners. He added the quota is set to increase gradually, hitting around 70,000 vehicles within five years. Reuters
The Trump administration took a tougher stance. Transportation Secretary Sean Duffy warned Canada would “surely regret” allowing Chinese cars into its market. Meanwhile, U.S. Trade Representative Jamieson Greer was blunt: the vehicles were “not coming here.” Reuters
Tesla slipped 0.2% to $437.50 in U.S. trading. Rivian dropped 2.4% to $16.67, while Lucid edged up 0.7% to $10.12.
Tesla stayed under scrutiny as U.S. auto safety regulators gave the company a five-week extension to probe whether its vehicles broke traffic laws with the Full Self-Driving system active. The feature, which assists drivers, still demands they stay alert and supervise at all times.
The National Highway Traffic Safety Administration pushed back Tesla’s deadline for crucial responses to Feb. 23, granting extra time after the company asked to review records more thoroughly. NHTSA reported receiving 62 complaints and uncovered more media and crash reports possibly connected to the case.
Germany plans to roll out subsidies ranging from 1,500 to 6,000 euros for qualifying new electric vehicle buyers, Bild reported. Applications are slated to open on a dedicated website expected in May. The Environment Ministry has yet to comment, while Environment Minister Carsten Schneider was due to present details before the announcement was delayed until Monday.
The government plans to allocate 3 billion euros in EV subsidies between 2026 and 2029. The VDA auto industry group forecasts these measures will boost EV registrations by 17% this year, pushing numbers close to one million. However, Ferdinand Dudenhoeffer, head of the CAR research institute, criticized the subsidies, calling them economically unjustifiable and a burden on the budget.
Evidence of the wider shift appeared in Britain, where electrified vehicles captured over 48% of the market last year, according to the SMMT. The group also noted that sales of green-labeled cars reached their highest level in two decades, a trend tied to the rise in EV adoption.
Policy support isn’t guaranteed. Germany’s subsidy plan remains up in the air, Canada’s shift on China has sparked pushback from the U.S., and Tesla faces a risk of expanded regulatory scrutiny if probes find more issues.
