Canada has frozen $43 million in payments to Tesla pending a line-by-line investigation into its last-minute surge in EV rebate claims made on the final weekend of the government program.
The American EV maker run by U.S. presidential adviser Elon Musk will also be excluded from all future EV rebate programs as long as tariffs are in place, Transport Minister Chrystia Freeland said in a statement.
The stop-payment order appears to have been made before the current election was called Sunday, though Freeland only confirmed it Tuesday, while on the campaign trail for her University—Rosedale seat.
“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. No payments will be made until we are confident that the claims are valid,” she said in a statement texted to the Star.
“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.”
Earlier this month, the Star revealed that Tesla filed an extraordinary number of EV rebate claims in the final days of the program — the equivalent of selling two cars per minute, 24 hours a day — draining the government’s allotted funds 72 hours after auto dealers were told they had “a few weeks” to file their claims.
This left more than 200 independently owned Canadian auto dealers out of pocket approximately $10 million after they fronted rebates to customers and were not able to file for reimbursement. The Star spoke with four dealers who were all out more than $100,000 and were considering layoffs as a result.
In response to questions, Freeland’s office confirmed that these dealers would be made whole.
Huw Williams, spokesman for the Canadian Automobile Dealers Association (CADA), said he couldn’t believe something wasn’t done before the writ dropped, and was relieved at Tuesday’s 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 said.
“While the news that Tesla payments are being frozen pending investigation is positive news, this should have happened months ago,” he added.
“Committing to make the local dealers whole, for money they advanced on behalf of the federal government is good news and basic fairness. Dealers worried about going out of business or (issuing) layoffs will be greatly relieved.”
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.”
Freeland’s move to exclude Tesla from future federal government rebate programs comes on the heels of several provinces, which have ostracized the company because of the behaviour of its chief executive. This week, Prince Edward Island joined Nova Scotia, Manitoba and B.C. in withdrawing public rebates on Tesla products.
Ottawa’s iZEV rebate program offered purchasers of certain battery electric and plug-in hybrid vehicles $2,500-$5,000 off the purchase price. Dealers fronted the rebate to customers and were later reimbursed by the government.
In January, when the government announced that the program’s funding was running low, Tesla filed an unprecedented number of rebate claims, going from 300 to 5,800 a day across four locations in Toronto, Quebec City and Vancouver. The Friday and Saturday after the government warning were the two biggest days for claims in the six-year history of the program.
At the heart of the controversy around Tesla’s rebate surge is whether employees were simply back-filing for EVs that had already been sold.
The Star reported Tuesday that the rules of the iZEV program were quietly changed in a way that would have allowed this. Previously, the rules posted online had required dealers to file for rebates before cars were delivered to customers. Shortly after the story was published, the rules were restored to their original wording.
Freeland’s spokesperson Vasken Vosguian explained the back and forth, saying a Ministry of Transport employee changed the language on the website and when Freeland was notified of this, she asked that it be changed back to the original wording “to avoid any confusion.”
The Vickers family, who run two GTA Ford dealerships, say they are $80,000 out of pocket for EV rebates they provided to customers but weren’t able to file because the government closed down the system after the Tesla rebate surge.
“We’ve given the rebates to legitimate customers in good faith thinking that we’d get reimbursed by the government,” said Curtis Vickers. “I can’t go back to the customers and say: ‘You owe me $5,000.’ They didn’t do anything wrong. Nor did we.”
Told about the government’s about-face, Vickers credited the Star.
“The attention you drew to it had an effect,” he said. “That’s great.”
Vickers said he’d be monitoring the government’s online portal so he can file the rebates as soon as it’s reopened.
