For Tesla, things aren’t going easily on Canadian soil. Just last month, we saw how Tesla was booted from participating in the Vancouver International Auto Show over safety fears. Now, Tesla has been permanently banned from Canada’s federal Incentives for Zero-Emission Vehicles (iZEV) program by Ottawa, effectively cutting the company off from future electric vehicle subsidies. This is a big deal coming after a string of controversies around Tesla, its CEO, Elon Musk, and growing political tensions between Canada and the United States.
Transport Minister Chrystia Freeland made the decision earlier this week, saying it was in the national interest and the company’s part in rebate scams. “We cannot and will not condone in good conscience a company whose leadership backs illegal and illegitimate tariffs against Canada”, said Freeland, mentioning Elon Musk, who has expressed support to former US President Donald Trump’s very high tariffs trade policies.
Tariffs and Political Fallout
The context behind this decision is the recent imposition of a 25 percent tariff on goods of Canada entering the United States and a similar tariff on imported motor vehicles. Canada’s relations have become strained over the move, and thousands of Canadian officials have faced heavy criticism from the White House. It was supposedly said by both Trump and Musk that they’ve even proposed the annexation of Canada, an assertion that`s emboldened a furor and rejection.
Freeland described these remarks as very dangerous and deeply offensive. The sovereignty of Canada is not a bet in a game of billionaires, she said. Musk’s image of the public utility has become worse for Tesla in Canada, where many residents are turning against the company.
In addition to the political worries, Tesla is currently involved in two major federal fraud investigations. The company is charged with gaming the iZEV rebate program by submitting an uncharacteristically large number of vehicle sales in the last three days eligible for rebate – almost 8,600 units, or 18 percent of Tesla’s annual Canadian sales.
This worrisome activity led authorities to call off $43 million CAD in rebate payments to Tesla in order to figure out if some kind of fraud had occurred. If true, this would be one of the largest rebate scams in Canadian car history.
Declining Sales and Public Backlash
Things have taken a sharp turn for Tesla in Canada. In 2024, the automaker reached a peak of 46,000 vehicle sales, all of which qualify for a $5,000 federal rebate. Those days appear to be over. As public perception changes, Tesla vehicles are rapidly losing their resale value, and used cars are said to be collecting dust on dealership lots.
Reports of Tesla vehicle vandalism are on the upswing, and new car sales have dried up to virtually nothing. ‘’It’s like a flip of a switch,’’ said a Vancouver dealership manager. “People who once would have kicked and screamed on waitlists are not taking delivery now.
The iZEV program itself is currently on hold nationwide thanks to running out of allocated funds ahead of schedule. Though the federal government is promising new funding, the future of the program is unclear until after Canada’s upcoming late-April general election.
