Canada announced on Monday that it would freeze all government subsidies to Tesla and exclude the American electric car giant from future incentives, responding forcefully to a recent tariff dispute with the United States.
Canadian Transport Minister Chrystia Freeland announced that Tesla vehicles would no longer qualify for government electric vehicle subsidies. She instructed officials to revise the eligibility requirements, emphasizing that Tesla will remain excluded if the U.S. continues to impose what Canada has deemed “unlawful tariffs.”
Earlier this month, the Trump administration imposed a 25% tariff on imports from Canada. Although tariffs on automobiles and other goods covered by the U.S.- Mexico- Canada trade agreement (USMCA) were temporarily paused until April 2, tensions between the two nations remain high.
The subsidies Canada has put on hold amount to approximately 43 million CAD (30.11 million USD). According to Canadian media, the decision was initially made before Prime Minister Mark Carney announced plans for early elections in April. Reports indicated that Tesla filed an unusually high number of subsidy claims just before the incentive program ended in January. A Tesla dealership in Quebec reportedly sold over 4,000 vehicles during a single weekend, claiming approximately 20 million CAD in government incentives.
As trade disputes between the U.S. and Canada intensify, the Canadian government has already reduced financial incentives for Tesla vehicles purchased by taxi companies and ride-sharing services, effective earlier this month.
Tesla has also faced recent setbacks in Europe, where the company’s sales numbers in February took a steep dive. The European Automobile Manufacturers’ Association reported that Tesla sold only 16,888 vehicles in the European Union in February—a 40.1% decline from the same month last year and a 42.6% year-to-date decrease.
Notably, overall EV sales in the EU increased by 26.1% last month compared to a year earlier, making Tesla’s slump stand out even more starkly.
Analysts suggest Tesla’s declining popularity in Europe may reflect backlash against CEO Elon Musk. Musk has faced significant criticism after publicly voicing support for far-right European parties, including Germany’s controversial Alternative for Germany (AfD), and becoming embroiled in a scandal involving accusations of Nazi-like salutes.
Musk, closely allied with former President Donald Trump, is currently head of the Trump administration’s Office of Government Efficiency, spearheading structural changes within the federal government.
