Canada’s government in Ottawa is reportedly planning to end the tariffs it has imposed on Chinese electric vehicles.
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The government had imposed a 100% import duty on all Chinese-made electric vehicles last year, effectively closing the Canadian market to companies such as Nio (NIO), Li Auto (LI), and BYD (BYDDF). China responded to the electric vehicle tariffs by targeting Canada’s vast agriculture sector, slapping a 75.8% tariff on Canadian canola products.
Canada finds itself in the position of fighting simultaneous trade wars with the world’s two biggest economies – China and the neighboring U.S. The situation is proving to be too much for the Canadian economy, which appears to be barreling towards a recession. As a result, government officials in Ottawa are looking to end the trade dispute with China.
Public Support
At the same time, public opinion polls show that Canadian voters favor reducing the levies on Chinese electric vehicles and opening the market to more competition. The most recent survey showed that 62% of respondents either support or somewhat support lowering or canceling the tariffs on Chinese electric vehicles.
This is good news for Chinese electric vehicle makers such as Nio and BYD, and it could potentially open a new market to the companies, which have been taking market share throughout Asia and Europe. For Canadian consumers, they could soon have access to cheaper electric vehicles.
The price tag for a Chinese-made BYD Seagull electric vehicle is around C$13,800 (US$10,000) without the 100% tariffs or added costs like shipping. Right now, there are no electric vehicle models in Canada that are available for less than C$45,000, including those made by Tesla (TSLA).
Is NIO Stock a Buy?
The stock of Chinese automaker Nio has a consensus Moderate Buy rating among 12 Wall Street analysts. That rating is based on six Buy, five Hold, and one Sell recommendations. The average NIO price target of $6.16 implies 8.64% upside from current levels.
