Tesla launched the Cybertruck in Canada last night, and its high price was made even higher thanks to the federal luxury tax. However, Tesla is working to make it a little bit more affordable by getting the luxury tax removed from the equation.
UPDATE: Tesla has now removed the luxury tax. The headline has been updated to reflect this. The original article appears below with more information.
As we first reported last night, the Cybertruck All-Wheel Drive (AWD) in Canada starts at $137,990, and the Cyberbeast at $165,990. One key consideration for Cybertruck buyers in Canada is the federal luxury tax, which was introduced in 2022 and is applicable on vehicles priced above $100,000. According to the regulations, the amount taxed is either 10% of the taxable value of the vehicle, or 20% of the amount that the vehicle’s price exceeds the $100,000 threshold, whichever is the lesser amount.
Given the Cybertruck’s prices, the 20% rule applies, which means the luxury tax adds $8,173.20 for the AWD variant, and $13,773.20 for the tri-motor variant.
However, there is an important distinction in the regulations that should make the Cybertruck exempt from the luxury tax. According to the government’s definitions, only vehicles with a gross vehicle weight rating (GVWR) of 3,856kg (8,501lbs) or less are subject to the tax.
According to the Cybertruck owner’s manual, the GVWR of both variants, even with the lighter all-season tires, are more than 4,000kg (8,818lbs), putting them above the weight threshold for the luxury tax.
Given all of this, the Cybertruck should be exempt from the luxury tax, but Tesla’s own website lists it as part of the purchase price during the ordering process.
However, that looks like it will soon change. In response to a post from Nic Cruz Patane on X raising the issue, Siddhant Awasthi, the Cybertruck Vehicle Program Manager, confirmed Tesla is “working on fixing this.”
We are working on fixing this
— Siddhant Awasthi (@siddawa) August 9, 2024
Awasthi’s response could have two different meanings. One is that the fix is simply removing the luxury tax from their website, which is easy to do and could happen in a matter of days.
The other is having to work with the government to get it officially exempt from the tax. Based on the regulations, that should also be easy, but as we all know, working with the government is never a quick process.
We have reached out to Tesla for confirmation on which scenario applies, and will update this story when we get a response.
