Newly obtained internal documents show that Transport Canada was aware as early as November 2024 that the iZEV rebate program was nearing the end of its funding runway. Despite those warnings, no public notice was issued until January 10, 2025 — just three days before the program ran dry, triggering a surge in claims and putting Tesla at the centre of the controversy.
Early Warnings, Late Notice
According to internal records obtained through Access to Information requests by The Canadian Press, federal officials had identified as early as November 2024 that core funding for iZEV could be depleted between late December and early January. However, the first public signal that the program was nearing its end did not come until January 10, 2025 — just days before the money was gone.
Three days later, the program was halted after a flood of rebate submissions. Over a single weekend, $48 million in claims were filed, $43 million of which were from Tesla alone.
Record Demand — and a Political Dilemma
The iZEV program, launched in 2019, provided up to $5,000 for battery electric vehicles and $2,500 for plug-in hybrids, with a price cap of roughly $55,000. For Tesla, that meant the Model 3 and certain Model Y variants were among the most popular vehicles benefiting from the incentive.
Demand surged in late 2024, driven in part by Quebec announcing it scaling back and temporarily pausing its provincial rebate and growing concerns that federal funding was running low. December alone saw more than $122 million in claims processed — a record burn rate.
Internal emails show officials were debating how and when to alert stakeholders. One memo warned that an orderly wind-down was necessary to “limit negative impacts on industry and consumers.” Yet the communications plan was delayed as political discussions reportedly explored injecting new funding into the program.
By January 8, staff were still seeking clarity on remaining funds. The answer, according to one internal message: “The program has run out of funds.”
Fallout for Tesla and the EV Market
Tesla’s $43 million in submissions — representing vehicles already delivered and eligible under program rules — became a political lightning rod in the aftermath. As we previously reported, Tesla maintained its filings were compliant and processed within longstanding guidelines, which in the end were corrobated after an internal investigation cleared the automaker of any wrongdoing, but the damage to Tesla’s brand was already done.
The pause also had immediate consequences for the broader EV market, as national EV market share dropped sharply, falling from 18% in December 2024 to below 7% by February 2025 with buyers delaying purchases in hopes incentives would return.
The federal government has since reinstated rebates, again offering $5,000 for fully electric vehicles and $2,500 for plug-in hybrids, with a gradual phase-out planned through 2030 — or until funds are exhausted.
Transport Minister Steven MacKinnon has pledged closer monitoring this time.
“The way the process works is you get a pre-approval before you can apply the rebate at point of sale, which is obviously what we want, and we’ll make sure that the free flow of information between us and dealer networks is assured,” MacKinnon said.
