An empty Canadian assembly line could become part of one of the most consequential shifts in the country’s auto industry in years. Chinese automaker Chery is examining whether unused manufacturing capacity in Canada could provide a faster route to local production as the company prepares to enter the Canadian market.
Chery executives say the possibilities include taking over idle capacity at an existing factory or manufacturing through partnerships backed by multiple investors. The company has not identified a plant, investment amount or production target, making the discussions exploratory rather than a confirmed factory announcement. Still, the timing matters. Chery is preparing for a Canadian market launch in early 2027 while Ottawa is actively encouraging Chinese automakers to pair greater market access with meaningful Canadian manufacturing.
Chery Is Looking Beyond Simply Importing Cars
Chery executive vice-president Guibing Zhang has made clear that the company sees Canada as more than an export destination. Speaking at Chery’s headquarters in Wuhu, China, Zhang said the company was examining idle Canadian manufacturing capacity and communicating with potential investors about different ways a production arrangement could be structured. Importantly, he argued that Canadian manufacturing could make sense even without access to the much larger U.S. market. That suggests Chery is at least studying whether Canadian demand, combined with exports to other markets, could support a localized operation.
The company has not said whether it wants to purchase a factory outright, lease production capacity or rely on contract manufacturing. A partnership structure appears particularly important because Zhang has discussed investment coming from multiple parties rather than Chery alone. Chery vice-president Charlie Zhang has also been in contact with Canadian Industry Minister Mélanie Joly. At the same time, the automaker is preparing to introduce its vehicles to Canadian consumers in early 2027. That creates an unusual sequence: Chery could begin as an importer while simultaneously negotiating the foundations of a longer-term manufacturing presence.
Canada’s New China EV Policy Helped Open the Door
The possibility of Canadian-made Chery vehicles would have been considerably harder to imagine only a year earlier. Canada imposed a 100% surtax on Chinese-made electric vehicles in 2024, effectively matching the trade barriers being erected in the United States. Ottawa reversed course in 2026 as part of a broader economic arrangement with Beijing. Beginning March 1, Canada established a country-specific quota allowing 49,000 China-origin electric vehicles annually to enter at the normal 6.1% most-favoured-nation tariff rate instead of the previous 100% surtax.
That quota is designed to grow by 6.5% annually, while an increasing portion will be reserved for lower-priced EVs. Ottawa says the first-year quota represents less than 3% of Canada’s new-vehicle market. More significantly for Chery, the federal government explicitly described the arrangement as a tool for encouraging Chinese joint-venture investment in Canadian manufacturing and the domestic EV supply chain. Prime Minister Mark Carney’s government said it expects significant Chinese auto investment to emerge within several years. Chery’s factory discussions therefore fit remarkably closely with the industrial outcome Ottawa said it wanted when the tariff framework was redesigned.
Idle Ontario Plants Make the Idea More Than Theoretical
Canada already has automotive factories that are producing little or nothing, which helps explain Chery’s interest in existing capacity instead of immediately proposing a new greenfield plant. General Motors ended production of its BrightDrop electric delivery vans at CAMI Assembly in Ingersoll, Ontario, after demand developed more slowly than expected. GM has been evaluating other opportunities for the facility. Under its 2026 agreement with Unifor, the automaker also committed not to immediately sell or close CAMI while alternative production opportunities were being considered.
Stellantis’ Brampton Assembly Plant presents another example of the disruption running through Canadian manufacturing. Production there ended in late 2023 ahead of a planned retooling, but plans to build the Jeep Compass in Brampton were subsequently abandoned. Stellantis has since signed a memorandum concerning a potential sale of the facility to Canadian armoured-vehicle manufacturer Roshel. None of this means Chery is negotiating for CAMI or Brampton — Chery has not identified either plant. It does show why existing Canadian capacity is receiving attention. Canada’s five established vehicle manufacturers assembled more than 1.31 million light-duty vehicles domestically in 2024, so an idled factory represents infrastructure, skills and supplier relationships that can take decades to build from scratch.
Ottawa Would Demand Much More Than Final Assembly
Any Chery factory arrangement would have to satisfy conditions that Ottawa has deliberately made more demanding than simply attaching wheels or finishing imported vehicles. Industry Minister Mélanie Joly has outlined four major expectations for Chinese automotive manufacturing: a joint venture with majority Canadian ownership, labour standards comparable to the Canadian auto industry, meaningful use of local supply chains and safeguards covering vehicle software and consumer data. The approach is intended to ensure that market access produces Canadian industrial activity rather than a thin final-assembly operation dependent almost entirely on imported components.
Canada’s import rules reinforce that position. Global Affairs Canada specifically states that a complete EV knock-down kit substantially manufactured in China remains a China-origin vehicle even if the kit is assembled in Canada or another country. Any foreign investment could also face scrutiny under the Investment Canada Act, which permits national-security reviews of foreign investments regardless of their size. Meanwhile, vehicles produced domestically for Canadian buyers must meet Canada Motor Vehicle Safety Standards, and manufacturers must demonstrate compliance before using the National Safety Mark. For Chery, securing an empty factory would therefore be only one piece of a much larger regulatory, ownership, supplier and technology puzzle.
Chery Has the Scale to Consider a Canadian Factory
Chery is not a small emerging manufacturer testing international demand with a handful of vehicles. Reuters describes it as China’s largest automobile exporter, and its international expansion has accelerated sharply. The company sold approximately 2.8 million vehicles in 2025, while Chery Group reported more than 2.2 million vehicle sales during the first nine months of 2026 alone. The group said overseas deliveries exceeded 1.55 million vehicles during that nine-month period, already surpassing its previous full-year level.
That scale matters because Canadian vehicle preferences are heavily tilted toward SUVs, pickups and other light trucks — segments in which Chery has substantial experience. Statistics Canada says trucks, a category that includes SUVs, vans and pickups, represented 88% of new motor-vehicle sales in Canada in 2025. Chery’s portfolio is particularly SUV-heavy, while its international strategy spans gasoline vehicles, hybrids, plug-in hybrids and battery-electric models rather than relying exclusively on EVs. A Canadian production decision would consequently be about more than competing for a small slice of the battery-electric market. It could eventually give Chery flexibility to respond to a Canadian market where electrification is growing but consumers continue to favour utility-oriented vehicles.
The United States Remains the Biggest Complication
The economics would be far simpler if a Canadian Chery factory automatically opened the door to U.S. customers. At present, it does not. Chinese automakers remain effectively shut out of the United States through a combination of tariffs exceeding 100% and restrictions targeting Chinese vehicle software, connectivity systems and hardware. U.S. officials have also reacted sharply to Canada’s decision to reopen its market to Chinese EVs. Transportation Secretary Sean Duffy said in January that Chinese vehicles entering Canada would not be permitted to simply continue across the American border.
That creates a fundamental challenge for any Canadian Chery plant because Canada’s existing auto-manufacturing model has traditionally been deeply integrated with the United States. Ottawa says more than 90% of Canadian-made vehicles are exported south of the border. President Donald Trump has nevertheless complicated the picture by saying he would be open to Chinese automakers establishing factories inside the United States if they employ American workers. Chery has also said it is interested in potential partnerships with U.S. manufacturers and could develop vehicles that avoid Chinese hardware and software. Those comments suggest the company is thinking beyond Canada, but current U.S. regulations mean a Canadian plant would still need a viable business case that does not depend on unrestricted American access.
Reusing Existing Plants Is Already Part of Chery’s Global Playbook
Chery’s interest in Canadian idle capacity is consistent with how the company is expanding elsewhere. In South Africa, Chery took over Nissan’s Rosslyn manufacturing assets and plans to upgrade the facility before starting production. The company committed to retaining hundreds of existing employees and has said the broader operation could ultimately create thousands of direct and indirect jobs. Rather than spending years developing an entirely new industrial site, Chery is adapting infrastructure and a workforce already connected to automobile manufacturing.
A similar approach is being explored in Britain. Nissan and Chery International UK signed a non-binding agreement to study having Nissan manufacture Chery vehicles at its Sunderland plant, potentially beginning in the 2027 financial year. Chery is also involved in manufacturing in Spain, where its European expansion has centred on a joint venture operating from a former Nissan facility in Barcelona. The strategy is becoming increasingly explicit. Chery said in October that roughly 48% of its export volume was already being manufactured overseas and that it expects the figure to exceed 50% by the end of 2026, reach 60% in 2027 and rise to 70% by 2030. Canada therefore fits into a much larger localization strategy rather than standing alone.
A Canadian Plant Would Still Require Several Major Decisions
For now, Chery’s Canadian manufacturing ambitions should be viewed as serious exploration rather than an announced investment. There is no confirmed factory, partner, production schedule, employment commitment or capital figure. Before vehicles could roll off a Canadian Chery production line, the company would likely need to settle on a site and ownership structure, demonstrate how Canadian suppliers would participate, clear the applicable federal investment reviews and establish manufacturing processes that comply with Canadian vehicle-safety requirements. The economics would also have to work in a domestic market that sold just under two million new motor vehicles in 2025.
The potential impact nevertheless explains why the discussions matter. Canada’s automotive industry contributed $16.8 billion to GDP in 2024, directly employed more than 125,000 people and indirectly supported roughly 427,000 jobs. It also includes hundreds of parts suppliers whose prospects depend heavily on sustained assembly activity. Bringing production back to an underused factory could therefore affect far more than the employees working inside the plant. Chery still has substantial hurdles to clear, particularly around ownership, supply chains, security and U.S. trade relations. But the fact that China’s largest auto exporter is openly studying idle Canadian capacity shows how quickly Canada’s automotive landscape is changing.
