Tesla is threatening legal action after the Canadian government froze more than $43 million in electric vehicle rebate payments under Canada’s iZEV program.
The company sent a letter to Transport Canada on March 28, demanding that payments resume “in the immediate term,” and accusing the government of unfairly cutting off funds with no prior warning. Tesla claims the decision came as a surprise and that it first learned of the freeze through media coverage, according to the letter obtained by the Toronto Star through an access to information request.
“Transport Canada knows full well that Tesla Canada has been fully compliant with its participation in the program,” the letter states. It goes on to say that Tesla “reserves all rights to seek appropriate remedies” if the issue can’t be resolved directly with the department.
The rebate program, which offers buyers up to $5,000 CAD ($3625 USD) off qualifying electric and hybrid vehicles, relies on dealers to front the discount and later apply for reimbursement. Tesla filed more than 8,600 rebate claims in a single weekend this past January, accounting for roughly 60% of the program’s remaining budget before funds ran out.
This rush left hundreds of independent dealers across Canada unable to recoup an estimated $10 million CAD they had already advanced to customers.
One of the key questions under review is whether Tesla’s claims followed the rule requiring rebate applications to be submitted before vehicle delivery. Tesla insists its filings were legitimate, citing previous guidance shared with dealers. “Filing assessments after vehicle delivery is entirely permissible,” the letter states, referencing a 2023 Transport Canada webinar and related documents that reportedly allowed for backdated claims.
Complicating matters, the freeze came shortly after a federal election was called, which typically triggers a “caretaker” period during which departments avoid major decisions. Tesla argues that the department should have continued issuing payments as usual. “Tesla expects the department to carry out its responsibility during the writ period to continue program delivery per status quo,” the company wrote.
Transport Canada has not responded publicly to Tesla’s claims. There is no indication yet when or if the frozen payments will be released.
