Canada Freezes $40M Tesla Aid After Alleged Subsidy Exploitation Triggers Sales Collapse

Canada has slammed the brakes on Tesla‘s access to millions in government subsidies. The federal government froze between $40-43 million earmarked for the electric vehicle giant following what officials called a “suspicious surge” in rebate claims.

Tesla somehow managed to submit nearly 8,700 rebate requests in just three days. Three days! That’s the kind of number that makes bureaucrats choke on their morning coffee.

Transport Canada wasn’t having it. They’ve suspended Tesla from the iZEV program entirely while launching a detailed investigation. Every single one of those thousands of claims is now getting the magnifying glass treatment.

The timing couldn’t be worse for Tesla, whose Canadian sales have tanked by a whopping 70% since this mess began.

The company’s strategy was technically legal but reeked of opportunism. They tweaked their Model Y pricing just enough to squeak under rebate thresholds, then proceeded to vacuum up almost the entire 2025 program budget before other manufacturers could blink.

Smart business move? Maybe. But Canadian officials called it what it was – exploiting loopholes rather than embracing the spirit of the incentive.

Tesla’s stock has taken a beating too, dropping about 15% since early 2025. Not exactly the kind of performance that keeps shareholders sending Elon congratulatory tweets.

The provincial response has been equally harsh. Several provinces have now barred Tesla from local EV programs. Politicians aren’t mincing words either, publicly blasting the company for bypassing Indigenous consultation and failing to meet environmental partnership standards.

Each eligible electric vehicle purchase under the iZEV program nets buyers around $3,700. That’s a decent chunk of change for consumers – and clearly too tempting a target for Tesla to resist.

The company’s aggressive rebate grab effectively left competitors out in the cold, with the annual budget depleted almost instantly. This event has created significant financial strain on dealerships who had been counting on government subsidies for their own electric vehicle sales.

For now, Tesla’s Canadian gravy train has derailed. And getting it back on track won’t be simple.

With Tesla’s global deliveries already showing year-over-year decline at 1.78 million EVs in 2024, this Canadian controversy adds another challenge to the company’s growth prospects.

This situation mirrors the coal industry decline seen in the United States, where market forces and regulations have dramatically reduced production despite governmental rescue attempts.