Tesla is set to become one of the first automakers to gain from Canada’s decision to lift its 100% tariffs on Chinese-made electric vehicles, leveraging its early shipments from Shanghai and its well-established Canadian sales network, according to industry experts.

Under an agreement announced last Friday, Canada will permit the annual import of up to49,000 vehicles from China at a most-favoured-nation tariff rate of6.1%. Prime Minister Mark Carney said the quota could increase to as many as70,000 vehicles within five years.

The deal includes a key caveat: half of the quota will be reserved for vehicles priced below35,000 Canadian dollars($25,189). All current Tesla models are priced above that threshold, potentially limiting the company’s access to the lower-cost segment of the quota.

Even so, Tesla holds a structural advantage. In2023, the U.S. automaker upgraded its Shanghai facility—its largest and most cost-efficient plant globally—to produce and export a Canada-specific version of the Model Y. That same year, Tesla began shipping the model from Shanghai to Canada, driving a460% year-on-year surge in Canada’s automobile imports from China through the Port of Vancouver to44,356 vehicles.

While Chinese automakers are expected to aggressively pursue the new export opportunity, Tesla’s early positioning and established logistics could allow it to move faster than many potential competitors.