Canada’s sudden pause in subsidies triggers a wild last-minute run

After the once abrupt end of the environmental bonus for electric cars in Germany, there is another example of a bumpy suspension of EV subsidies: Canada recently paused the subsidies virtually without warning, triggering a last-minute run that is now being linked to potential subsidy fraud.

Citing data from Transport Canada, the Toronto Star reports a ‘sharp and unrealistic increase in sales’ in the 72 hours following the announcement of the subsidy cancellation. The newspaper discovered four Tesla dealers who “declared sales of 8,600 EVs and were able to claim more than $43 million in rebates over the weekend of Jan. 10-12 — gobbling up more than half of the $71.8 million in program funding that had been remaining on Friday morning.”

Canada’s Incentives for Zero-Emission Vehicles (iZEV) programme had reportedly reached its budget limit in January and was therefore suspended on an ad hoc basis. According to the Toronto Star, when the funding freeze was announced on Friday morning, 10 January, 71.8 million dollars in programme funds were still available, which were used up the following Monday. The four Tesla dealers mentioned alone received more than half of this remaining budget.

The newspaper raises the question of how thousands of electric cars could be sold by just four dealers in such a short time from an organisational point of view, especially as ‘Transport Canada’ actually requires dealers to submit a rebate application prior to sale. However, this practice is said to have been thrown overboard during this confusing phase, with the result that vehicles that had already been sold were still subsidised. There is talk of a “wild final phase,” but also of potential subsidy fraud.

In one extreme case, one of the four Tesla dealers in Quebec City claimed almost 20 million dollars in public subsidies by claiming to have sold more than 4,000 electric vehicles in a single weekend. In total, more than 500 dealers are said to have quickly applied for subsidies.

Incidentally, the subsidy is still suspended. However, Transport Canada continues to say that it is only “paused.” The iZEV programme subsidised new electric vehicles and plug-in hybrids (purchase or lease) with up to 5,000 Canadian dollars (around 3,400 euros) and was extended in 2024. The list of eligible vehicles included 122 PHEV and 149 BEV model variants.

thestar.com