Canada Excludes Tesla From Future EV Incentives, Pauses Automaker's $43M Rebate Haul
The government of Canada has paused $43 million in incentive payments to American electric vehicle (EV) manufacturer Tesla pending a line-by-line investigation into how it applied for the money. In addition, Transport Minister Chrystia Freeland said that the company will be denied future tax breaks as long as the U.S. continues its trade war against Canada.
“As soon as I became Transport Minister, I asked the department to stop all payments for Tesla vehicles in order to fully examine each claim individually and determine whether all are eligible and valid,” Minister Freeland said in a statement to the Toronto Star. “No payments will be made until we are confident that the claims are valid.”
Tesla came under scrutiny earlier this month after it was revealed that the automaker filed an incredible number of applications for zero-emission vehicle (ZEV) rebates in January. The automaker claimed over $43 million in rebates 72 hours after the government announced that the Incentive for Zero Emission Vehicles (iZEV) program was running out of money.
The volume and speed of claims Tesla made — the equivalent of selling two vehicles per minute 24 hours a day over the course of the three-day period — left conventional dealers selling other automakers’ ZEVs without any time to claim incentives for their vehicles. At question is whether Tesla was back-filing for vehicles it had already sold, whether the government allowed that in the wake of announcing that the iZEV program was running out of money, and to what degree that disadvantaged dealerships that were filing for rebates before vehicles were delivered, as was initially required under Transport Canada’s rules.
Indeed, the language surrounding the rules for rebates on Transport Canada’s website was quietly changed to allow back filing, then changed back earlier this week. A spokesperson for the ministry told The Star that Minister Freeland ordered that the text be reverted to the original “to avoid any confusion.”
Tesla’s $43 million rebate haul, and the potential that it was achieved after the rules were changed, leaves other dealers in the lurch. In order to attract customers, dealers agreed to effectively undercharge customers and to take on the deficit while they awaited the money from the tax incentives. After the money suddenly dried up, that left some dealers with shortfalls of over $100,000, leading some to consider layoffs.
In response to questioning on the matter, Minister Freeland said that these dealers will be made whole. She also added that as long as President Trump — to whom Tesla CEO Elon Musk has become a close advisor — continues its trade war against Canada, the automaker will be denied future incentives.
“I also directed my department to change the eligibility criteria for future iZEV programs to ensure that Tesla vehicles will not be eligible for incentive programs so long as the illegitimate and illegal U.S. tariffs are imposed against Canada,” said Minister Freeland.
Unfortunately, it remains unclear when that will actually take effect, as the fate of the iZEV program has yet to be communicated to Canadians. The program, which ran out of money early, was only ever supposed to be funded until this month. However, following the Right Honourable Justin Trudeau’s decision to step down as prime minister, and the political chaos that ensued, little has been said definitively about the future of the program. Its absence, though, has led to a significant drop in ZEV sales.
