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[Op-ed by Vina Nadjibulla, Vice President of Research & Strategy at the Asia Pacific Foundation of Canada.]

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Industry Minister Mélanie Joly ... has identified four conditions for any proposed Chinese EV manufacturing venture: it must

• take the form of a joint venture that is majority Canadian-owned
• espect Canadian labour standards
• use Canadian parts
• ensure that vehicle software is secure and users’ data protected.

These are sensible conditions. But they are not sufficient.

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Joly has cited Magna’s collaboration with the Chinese automaker XPeng in Austria as a possible model. In September 2025, Magna announced that it would assemble two new XPeng electric-vehicle models at its contract-manufacturing operation in Graz, Austria. The arrangement adds production to Magna’s Austrian operations and supports XPeng’s strategy of localizing manufacturing for the European market.

But it is not a joint venture of the kind Joly is proposing for Canada. Based on what the companies have publicly disclosed, the arrangement is centred on assembly: Magna provides manufacturing capacity and production expertise, while the vehicles remain XPeng-branded and based on XPeng platforms. The public announcement does not identify any transfer to Magna of XPeng’s core software, battery technology or intellectual property.

The distinction matters. Contract manufacturing can sustain employment, add production to an existing facility and give a Canadian company a valuable role in a Chinese automaker’s international expansion. But those benefits are different from acquiring control over the technologies and capabilities that will shape the future of the industry.

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The same concern applies to the labour protection requirement. Forced-labour risks have been identified in Chinese automotive supply chains, including in the production of aluminum and other raw materials and components used in vehicles and batteries. Compliance with Canadian labour laws at a plant in Canada would not, on its own, address forced-labour exposure farther upstream.

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Potential Chinese partners should be required to disclose their suppliers, trace critical inputs and demonstrate that goods entering Canadian production are not linked to forced labour. Canadian workers should not be asked to compete with supply chains built on standards that would be illegal here.

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The software condition is even more consequential. Modern electric vehicles are equipped with cameras, microphones, location tracking, communications systems and continuously updated software. The security risk is not limited to whether a company promises to store Canadian drivers’ personal information in Canada.

Ottawa must determine who writes the code, who can update it remotely, where diagnostic and location information flows, and which telecommunications modules are installed. These are not only questions of personal privacy. Connected vehicles also raise national-security and critical-infrastructure concerns.

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After China, [Joly] will travel to Japan to meet Honda and Toyota, which together accounted for 77 per cent of vehicles assembled in Canada in 2025.

Japanese automakers have built substantial Canadian assembly operations around access to the integrated North American market, while Korean firms have become important investors in the battery and critical minerals supply chains supporting that system. Japanese officials have made clear that continued investment in Canada depends heavily on stable access to the United States.

Ottawa must therefore assess not only what a Chinese plant could add, but how it might affect the industrial ecosystem Canada has already built. Could integration with Chinese platforms discourage future Japanese or Korean investment? Would allied firms become more reluctant to locate sensitive technologies in Canada?

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Joly’s four conditions are a useful starting point. But the decision before Canada is not simply who will assemble the next generation of vehicles. It is whether any new partnerships will strengthen Canadian technological and industrial capacity, preserve access to critical markets and reduce vulnerability or create new dependencies that will be difficult to unwind.

Before any deal is signed, Canadians need to know what Ottawa is trying to build, how a Chinese partnership would advance that objective and what safeguards would protect Canada’s longer-term interests.

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