- Canada is putting a magnifying glass on EV rebates headed to Tesla after a strange bump in sales.
- Until it verifies every single sale associated with the rebates, it won’t send Tesla the money.
- It’s also banned Elon Musk’s brand from future subsidy programs while US tariffs exist against it.
Earlier this month, Tesla sparked outrage among Canadian auto dealers after selling an astonishing 8,653 cars in just three days across four stores, which equates to roughly two cars per minute for three straight days, including the hours the stores were closed. The company then filed for C$43.1 million (US$30M) in rebates.
That all unfolded right before Canada ran out of cash in its EV rebate fund. The combination of factors led officials to wonder if Tesla gamed the system somehow. Now, the Canadian government is freezing payments to the EV maker led by US presidential adviser Elon Musk, while it sorts everything out.
Everyone suspected that, as funds in the EV rebate program dwindled, sales would rise a bit. That would be great for Tesla in Canada, especially since it was struggling to move cars early this year. But selling 8,653 cars in just three days? That’s not just a boost, it’s a bit of a red flag. Something felt off.
The Freeze and a Tariff Twist
On Tuesday, Canada’s Transport Minister Chrystia Freeland made the call to freeze C$43 million (equal to $30M at current exchange rates) worth of payments. “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,” Freeland said in a statement to the Toronto Star. “No payments will be made until we are confident that the claims are valid.”
But Freeland didn’t stop there.
“I also directed my department to change the eligibility criteria for future iZEV programs to ensure that Tesla vehicles will not be eligible for incentives so long as the illegitimate and illegal US tariffs are imposed against Canada” she added.
Freeland has also directed changes to eligibility criteria for future rebate programs, potentially making Tesla vehicles ineligible for subsidies until issues regarding U.S. tariffs are resolved.
By linking the issue to US tariffs, the Canadian government is addressing a situation that is largely beyond Tesla’s control, as tariff decisions are made at the national level. While the embattled CEO may have a close relationship with the American President, he doesn’t have the power to end the tariffs on his own. Currently, Trump is planning additional tariffs for April 2. However, he’s already backtracked and flip-flopped on his plans multiple times. Perhaps he’ll reconsider his strategy if Musk begins to feel the pressure.
A Sting for Local Dealers
Back in Canada, Freeland also mentioned that the government would reimburse more than 200 independently owned auto dealers who were left out of about CA$10 million after fronting rebates to customers without being able to file for reimbursement.
More: While Canada Fights Back Against Trump’s Auto Tariffs, Mexico Chooses Diplomacy Over Confrontation
Huw Williams, spokesman for the Canadian Automobile Dealers Association (CADA), welcomed the news.
“CADA has been shocked at the revelations that Tesla was somehow allowed to … take $43 million in rebates while locally owned dealers have been left holding the bag on funds advanced to customers on behalf of the federal government,” he told the Toronto Star. “While the news that Tesla payments are being frozen pending investigation is positive news, this should have happened months ago,” he added.
It’s worth mentioning that Elon Musk, who holds a Canadian passport and has sparked controversy by posting (and later deleting) on X that “Canada is not a real country,” has significantly benefited from Canadian EV rebates. Since 2019, Tesla has claimed $713 million in rebates, making it the largest recipient of these incentives by far.