Canada Freezes Tesla EV Rebates Over Trump Tariffs, Bars Future Incentives

The Canadian federal government has halted all payments to Tesla under its electric vehicle (EV) subsidy program and banned the automaker from future rebates until U.S. President Donald Trump’s tariffs on Canada are removed. Transport Minister Chrystia Freeland announced the decision on Monday, calling it a necessary measure to protect Canada’s economy from what she described as “illegitimate and illegal” U.S. trade policies.

“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,” Freeland said in an emailed statement to Global News.

In addition to pausing payments, Freeland confirmed that Tesla will be permanently excluded from the federal Incentives for Zero-Emission Vehicles (iZEV) program as long as Trump’s tariffs on Canadian goods remain in place.

“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,” Freeland added.

The minister’s decision follows reports that Tesla, owned by billionaire Elon Musk—a key ally and adviser to Trump—filed 8,653 rebate claims over a 72-hour span in January, just before the iZEV program’s previous phase was set to expire. The surge in claims prompted further scrutiny from the Canadian government.

Freeland’s move comes as she campaigns for re-election as the Liberal MP for University-Rosedale, with trade protectionism emerging as a hot-button issue. The tariffs have also sparked a wave of anti-Tesla sentiment across Canada, with protests targeting the company’s dealerships.

Several provinces have already taken punitive steps against Musk’s companies. Nova Scotia and Manitoba both removed Tesla vehicles from their respective EV rebate programs. Meanwhile, British Columbia announced it would exclude Tesla products from its EV charger rebate program for single-family homes, opting to prioritize Canadian-made goods.

In Ontario, Premier Doug Ford recently terminated a $100-million contract with Musk-owned Starlink, an internet provider, vowing not to revisit the deal even if the tariffs are lifted.

While Tesla faces mounting opposition in Canada, Conservative Leader Pierre Poilievre has been linked to Musk through past praise. Musk previously endorsed Poilievre, though the Tory leader distanced himself from the Tesla CEO following the recent tariff controversy.

“It would be nice if we could convince Mr. Musk to open some of his factories here in Canada and create some high-paying jobs for our people,” Poilievre said in January.

However, a spokesperson for Poilievre clarified to Global News that the Conservative leader has no personal ties to Musk.

“The rebate program for electric vehicles is a Justin Trudeau policy. Mr. Poilievre does not know the individual you mention and has never spoken to him,” the spokesperson stated, deflecting criticism and highlighting Liberal Leader Mark Carney’s business ties to Musk through Brookfield investments.

The Canadian government’s hardline stance against Tesla is expected to have a significant impact on the automaker’s sales in the country. With provincial and federal rebates off the table, Tesla vehicles will become less attractive to Canadian consumers, potentially giving rival EV manufacturers a competitive edge.

Industry experts warn that Canada’s exclusion of Tesla from its green incentives could escalate trade tensions with the U.S., creating further uncertainty in the EV market.