Canada halts Tesla subsidies amid tariff tensions and rebate concerns

28 March 2025

The Canadian government has put a stop to federal subsidy payments to Tesla and has barred the company from future rebate programs. The decision comes amid growing tensions between Canada and the United States over tariffs, and concerns about Tesla's rebate claims. Transport Minister Chrystia Freeland has directed her department to investigate Tesla's past claims and to change future incentive program rules to exclude Tesla vehicles as long as US tariffs remain in place.

The ban follows Tesla's submission of 8,653 rebate claims in a short 72-hour period just before a subsidy program ended. This large volume of claims raised red flags, and the Canadian Automobile Dealers Association is questioning the validity of such high sales figures. The claims, totaling over $43.1 million CAD (£23 million), were submitted for sales at just four dealerships, suggesting an unusually high sales rate.

Tesla CEO's past comments about Canada and his praise of Canadian Conservative Leader Pierre Poilievre, have added some fuel to the situation. In response, several Canadian provinces, including Nova Scotia, Manitoba, and British Columbia, have also decided to exclude Tesla from their respective rebate programs.

The federal government's decision also impacts Canadian car dealerships. More than 200 independent dealerships are holding a combined $10 million CAD (£5 million) in rebates, as they fronted the money to customers who expected to be reimbursed by the iZEV program. With the program frozen, these dealers are now facing financial strain. Freeland has assured them they will eventually receive the funds.

This is not the first time Tesla has faced scrutiny over its use of incentive programs. In 2019, the company introduced a low-range Model 3 to qualify for a federal rebate. It allowed Tesla to collect significant amounts of Canada's taxpayer money in EV subsidies. The government's recent actions signal a firm stance against what they perceive as Tesla's exploitation of subsidy programs.

The current situation highlights the delicate balance between promoting electric car adoption and ensuring fair use of taxpayer funds. And it shows that politics can be a very dangerous game, which is why not that many successful business people get involved directly. This isn't the end of the Tesla saga; this story is just beginning to unravel.

Via