Canada has frozen all electric vehicle rebate payments for Tesla (Nasdaq: TSLA) and banned the American automaker from future incentive programs, Transport Minister Chrystia Freeland said on Tuesday, citing US tariffs imposed by President Donald Trump.
The government has halted approximately C$43 million ($30 million) in rebate payments until each claim is individually investigated and verified as legitimate, Freeland said in a statement.
“No payments will be made until we are confident that the claims are valid,” Freeland said. “I also directed my department to change the eligibility criteria for future iZEV programs to ensure that Tesla vehicles will not be eligible for incentives so long as the illegitimate and illegal US tariffs are imposed against Canada.”
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The freeze follows reports that Tesla filed an unusual number of rebate claims just before Canada’s Incentives for Zero-Emission Vehicles (iZEV) program ended in January. According to The Toronto Star, a single Tesla dealership in Quebec City claimed nearly C$20 million in subsidies by documenting more than 4,000 vehicle sales over one weekend.
Four Tesla showrooms across Canada reportedly sold about 8,600 cars in just three days in January, accounting for roughly 18% of the company’s annual Canadian sales volume. The Star reported Tesla represented 89% of all claims filed during that period.
This is the latest in the escalating trade tensions between Canada and the US. Trump has imposed 25% tariffs on most Canadian goods, with implementation scheduled for early April. The president indicated on Monday that automobile tariffs would follow soon.
Canadian Prime Minister Mark Carney, who called a federal election for April 28, wrote on X: “Auto parts cross the Canada-US border six times on average before final assembly. In a trade crisis, that’s a vulnerability. It’s time to build more cars right here at home with an All-In-Canada auto manufacturing network.”
Tesla CEO Elon Musk, also the head of the Trump administration’s Department of Government Efficiency, has supported Trump’s tariff policies despite Tesla warning US officials earlier this month that American exporters could face retaliatory measures.
Three Canadian provinces have also canceled their local EV subsidies for Tesla vehicles.
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