• Tesla is entering its “find out” era in Canada.
• The Canadian government is investigating $43.1 million CAD ($30 million USD) in EV sale subsidies requested by Tesla in just 72 hours.
• Canadian officials have also barred Tesla from iZEV incentives until the U.S. backs off tariffs.

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Tesla is America’s electric car juggernaut; a domestic force that helped to push EV adoption all across the globe—something it managed to do by pushing boundaries (and sometimes buttons). Naturally, that means Tesla can find itself in hot water every now and then with regulatory bodies. Its latest upset? The entirety of the Canadian government.

Between a multi-million dollar run at Canada’s taxpayer-funded EV incentive program, CEO Elon Musk’s political meddling and a deadline of even greater American-induced tariffs hitting Canadian goods as early as next week, the country has had it. Not only are all inventive payouts on hold, but Tesla has been explicitly excluded from all future federal government rebate programs in Canada—at least for now.

Photo by: Andrei Nedelea

The Great Rebate Grab

The last straw was a sketchy claim for more than $43.1 million CAD ($30 million USD) in EV subsidies filed just after Transport Canada announced that funding for the country’s Incentives for Zero-Emission Vehicles (iZEV) program was about to run out. Now, sure, that’s a lot of money. But it wasn’t just the amount that had alarm bells going off. It was the volume.

The requests were for the equivalent of Tesla selling 8,653 EVs in a single weekend across just four Canadian dealerships. That’s basically one car every 30 seconds for 72 hours straight.

Either Tesla’s sales team managed to hold the world’s greatest ’round-the-clock fire sale, or something fishy was going on—that’s what the Canadian Automobile Dealers Association alleges, anyway. And it’s enough to draw the attention of Canadian officials who have since frozen the payments to the American automaker.

“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,” said former Transport Minister, Chrystia Freeland, in a statement to the Toronto Star. “No payments will be made until we are confident that the claims are valid.”

Holding the $10 million CAD ($7 million USD) bag are more than 200 independent dealerships that fronted customers the money who were expecting to be reimbursed from the iZEV program. Once the program was frozen, dealers were unable to submit 2,295 rebates, resulting in some considering laying off employees over the loss of expected funds.

Freeland says that these dealers will ultimately be made whole.

Gaming Canada: A Tesla Tradition

Photo by: Tesla

This isn’t Tesla’s first rodeo when it comes to playing fast and loose with incentive programs. Remember Tesla’s Canada-only compliance car? No? Well, let’s take a quick trip back in time to the beginning of the iZEV program.

In order to qualify for iZEV program back in 2019, a vehicle had to meet a plethora of guidelines. One of those requirements was the starting MSRP of the model. The Tesla Model 3 (having fewer than six seats) needed to start below $45,000 CAD; however, up until the iZEV program, Tesla charged $52,990 CAD for the Model 3 SR+ in Canada.

Here’s where the fun kicks in.

Tesla then launched its compliance model. For a cool $44,999 CAD—$1 less than the limit—buyers of the cheapest Model 3 became the proud owners of a car that could travel a whole 94 miles between charges. Keep in mind that Musk has previously said that 250 miles of range would be “unacceptably low” for its vehicles.

The plus side is that SR+ buyers would also qualify for the iZEV credit. But the end result? Canadian taxpayers unwittingly subsidized Tesla purchases to the tune of $115 million CAD, but only because this compliance car existed.

Some more color on Tesla’s Canadian subsidies from the Toronto Star:

Tesla has been the biggest recipient of Canadian EV rebates, claiming $713 million since 2019. This voracious appetite for government money has rankled many now that Musk has embarked upon radical cuts to U.S. government programs and mass layoffs of civil servants. Protests at Tesla dealerships have taken place on both sides of the border, while reports of vandalism of Tesla vehicles have proliferated.

Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, welcomed the investigation.

“Tesla exploited the iZEV program by sneaking in its Shanghai-built product to soak up Canada incentives while its CEO declared ‘Canada is not a real country’ on X. Sounds like they made their bed.”

Politics, Politics, Politics

Photo by: White House

It’s not just Tesla’s odd accounting that has Canada closing its wallet. The entire country is tired of American politics right now, and Musk (the best-friend-in-chief) isn’t helping the automaker’s cause.

His cozy relationship with U.S. President Donald Trump and willingness to declare Canada “not a real country” (in a now-deleted post on X) have made the Canadian government unwilling to cut the American automaker any slack. In fact, Freeland says that Canada will ensure that Tesla remains completely ineligible for any future iZEV programs in Canada for as long as the U.S. imposes tariffs against Canada:

“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 Freeland.

The result of everything? A situation so uniquely Tesla that it plays out more like a scene from a Netflix show than it does real life. Politicians are pissed, the CEO of an automaker is playing politics, dealerships are out boatloads of cash over a fishy deal, and consumers that were once happy to get behind the wheel of the EV with the coolest badge are now turning against the automaker.

Canada used this as an opportunity not to just yank Tesla’s subsidy privileges—the entire country went full scorched-earth to make an example of the brand. Now Tesla is finding out that bending rules can have consequences, especially when the international spotlight is on a company figurehead who seems to be evaporating trust much more rapidly than it can be restored.