Canada Freezes Tesla EV Subsidies Amid Intensifying Trade Rift

On Tuesday, Canadian Transport Minister Chrystia Freeland announced that Canada has frozen all electric vehicle (EV) subsidies for tesla and barred the company from future EV incentive programs. All payments will be suspended until each application undergoes individual review and verification. As of now, Canada has frozen CAD 43 million in subsidies for Tesla.

She has also directed the Ministry of Transport to amend the eligibility criteria for future Zero-Emission Vehicle Incentive Programs (iZEV) to ensure that Tesla vehicles do not qualify while the U.S. imposes "illegal and unreasonable tariffs" on Canada.

Tesla reportedly submitted an unusually high volume of EV subsidy claims in the final days of the program in January. A single Tesla dealership in Quebec City registered over 4,000 vehicle sales in one weekend, claiming nearly CAD 20 million in government subsidies.

This equates to selling two EVs per minute, operating 24/7, which led to the exhaustion of government funding within 72 hours after dealerships were notified that there were only weeks left to submit applications.

As a result, over 200 independent Canadian auto dealerships fronted approximately CAD 10 million in customer subsidies but were unable to claim government reimbursement in time, leading to financial losses. According to The Star, four affected dealerships reported losses exceeding CAD 100,000 each, with some even considering layoffs.

Freeland's office has confirmed that these dealerships will be compensated.

Hugh Williams, spokesperson for the Canadian Automobile Dealers Association (CADA), expressed skepticism over why this issue wasn't addressed before the upcoming elections. However, he welcomed Tuesday's decision.

"It's shocking that Tesla managed to secure CAD 43 million in subsidies while local dealers had to bear customer subsidy risks," Williams said. "Freezing Tesla's subsidies and launching an investigation is a positive step, but this decision should have been made months ago. The commitment to reimbursing local dealerships is good news and a basic matter of fairness. Dealerships on the brink of bankruptcy or layoffs will now breathe a sigh of relief."

Flavio Volpe, president of the Canadian Automotive Parts Manufacturers' Association, also welcomed the investigation.

"Tesla exploited the iZEV program to sneak in products made in Shanghai and siphon off Canadian subsidies," he stated. "Their CEO even posted on X that 'Canada is not a real country.' Now, they're facing the consequences."

Tesla's Subsidy History and Growing Trade Tensions

Since 2019, Tesla has been the largest recipient of Canada's EV subsidies, claiming a total of CAD 713 million.

Amid growing trade tensions with the U.S., Ontario halted subsidies for Tesla vehicles used as taxis or rideshare services earlier this month. This week, Prince Edward Island joined Nova Scotia, Manitoba, and British Columbia in withdrawing public subsidies for Tesla products.

Ask Aime: "What is the Canadian government's decision regarding Tesla's electric vehicle subsidies, and how will it impact the company's operations in Canada?"