Canada Halts EV Rebates For Tesla Amid Rising Trade Tensions With US

In a strong action against Tesla Inc. (TSLA), Canada suspended all rebate payments to the electric vehicle (EV) manufacturer and excluded it from future incentive schemes. The move, announced by Transport Minister Chrystia Freeland, was made in response to new American tariffs on Canadian products.

The freeze, valued at C$43 million ($30.11 million), will last until every rebate claim is reviewed individually. Freeland also instructed Transport Canada to modify eligibility criteria for the Incentives for Zero-Emission Vehicles (iZEV) program so that Tesla is kept out as long as what she called “illegitimate and illegal U.S. tariffs” continue.

The action comes after news broke that a Quebec City Tesla dealership received close to C$20 million in subsidies by reporting more than 4,000 EV sales on a single weekend. The reports have raised alarms regarding possible abuse of government rebates, and as a result, Tesla’s participation in the program has been subjected to more scrutiny.

Further, Nova Scotia and several other Canadian provinces have already knocked Tesla out of local rebate programs. The move has been triggered by increasing dissatisfaction with the actions of CEO Elon Musk on Canada and his close association with former U.S. President Donald Trump, who has placed high tariffs on Canadian and Mexican products.

President of the Automotive Parts Manufacturers’ Association Flavio Volpe disparaged Tesla’s actions, “Tesla took advantage of the iZEV program by snaking its Shanghai-built product into grabbing Canada incentives as its CEO pronounced ‘Canada is not a real country’ on X. Looks like they laid in it.”

Impact on Tesla’s Market

Tesla has been the biggest recipient of Canada’s EV rebate schemes, earning around C$713 million ($499.9 million) since 2019. With this new development, the company suffers a significant blow that may affect its sales and market share in Canada.

Ontario had already ceased rebating Tesla cars for use as taxis or ride-hailing services earlier this month, further limiting restrictions on the automaker.

While Tesla has yet to officially respond to the announcement, the decision adds to the broader challenges the company faces amid increasing trade tensions and government scrutiny.

With Canada’s general election set for April 28, the move also has political implications, signaling the government’s firm stance against U.S. tariffs and corporate practices that may undermine national economic interests.

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