Canada Suspends Musk's $43M Tesla EV Rebate Request Following Swift Sales and Prohibits Future Subsidies | Carscoops

      The country is set to closely examine all EV rebates designated for Tesla and will restrict its participation in future programs as long as tariffs are in effect.

      Canada is reviewing EV rebates allotted to Tesla following an unusual increase in sales.

      Before releasing any funds to Tesla, it will verify each sale linked to the rebates.

      Additionally, Tesla has been excluded from upcoming subsidy programs while U.S. tariffs apply.

      Earlier this month, Tesla caused a stir among Canadian auto dealers by selling an impressive 8,653 vehicles in merely three days across four locations, which averages to around two cars per minute for a continuous three-day period, including closed hours. Subsequently, the company applied for C$43.1 million (US$30 million) in rebates.

      This all happened just before Canada depleted its EV rebate budget. This combination of events raised suspicions among officials about whether Tesla manipulated the system in any way. Consequently, the Canadian government has paused payments to the EV manufacturer led by U.S. presidential advisor Elon Musk until everything is clarified.

      It was anticipated that as funding for the EV rebate program dwindled, there would be a slight uptick in sales. This would benefit Tesla in Canada, particularly since it faced difficulties in selling cars earlier this year. However, selling 8,653 vehicles in three days felt excessive—a concerning sign that something might be amiss.

      The Freeze and Tariff Update

      On Tuesday, Canada’s Transport Minister Chrystia Freeland decided to halt C$43 million (equivalent to $30 million at current exchange rates) in payments. “Upon taking office as Transport Minister, I instructed my department to cease all payments for Tesla vehicles to thoroughly assess each claim and validate their eligibility,” Freeland stated to the Toronto Star. “No payments will proceed until we are assured that the claims are legitimate.”

      Freeland went further.

      “I have also instructed my department to amend the eligibility requirements for future iZEV programs to ensure that Tesla vehicles remain ineligible for incentives as long as the illegal U.S. tariffs are enforced against Canada,” she remarked.

      Freeland has directed modifications to eligibility criteria for forthcoming rebate programs, which could render Tesla vehicles ineligible for subsidies until the U.S. tariff issues are resolved.

      By connecting this matter to U.S. tariffs, the Canadian government is tackling a situation that is largely outside Tesla’s control, as tariff decisions are made at the national level. Although the controversial CEO maintains a close relationship with the American President, he lacks the authority to eliminate the tariffs independently. Currently, Trump plans to impose additional tariffs on April 2, although he has already shifted his position on his plans multiple times. There’s a possibility he may reassess his strategy if Musk begins to encounter pressure.

      A Setback for Local Dealers

      In Canada, Freeland also announced that the government would compensate over 200 independently owned auto dealers who missed out on about CA$10 million after providing rebates to customers without the ability to claim reimbursement.

      Spokesman for the Canadian Automobile Dealers Association (CADA), Huw Williams, expressed his approval of the decision.

      “CADA has been astonished by the disclosure that Tesla was permitted to claim $43 million in rebates while locally owned dealers were left to bear the costs for funds advanced to customers on behalf of the federal government,” he told the Toronto Star. “While the decision to freeze Tesla payments pending investigation is positive news, it should have been made months ago,” he noted.

      It’s important to highlight that Elon Musk, who possesses a Canadian passport and has ignited controversy with a post (which he later deleted) on X claiming that “Canada is not a real country,” has greatly profited from Canadian EV rebates. Since 2019, Tesla has received a total of $713 million in rebates, making it the largest beneficiary of these incentives by a significant margin.