Ottawa to reimburse auto dealers on hook for $11 million in unpaid EV rebates

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OTTAWA — The federal government will explain today how it plans to reimburse auto dealers who were left hanging when Ottawa suspended its electric vehicle rebate program earlier this year.

In January, Transport Canada paused its popular Incentives for Zero-Emission Vehicles program — iZEV — after its funding ran out. Ottawa spent nearly $3 billion on iZEV during its five-year lifespan.

The program provided up to $5,000 toward the purchase of a new zero-emissions vehicle. But with the abrupt suspension of the program — only three days after the government suggested it would be paused when the funds were exhausted — hundreds of dealerships were forced to swallow the cost of any rebate claims they hadn’t yet submitted.

“It was a shocking series of events in January when they shut down the program after giving notice that the program would go through an orderly wind-down,” said Huw Williams, public affairs director with the Canadian Automobile Dealers Association, which represents about 3,500 auto dealerships.

He said that, collectively, dealers are out about $11 million.

Tesla submitted rebate claims worth more than $43 million for 8,600 EVs on the weekend before the program was suspended, according to analysis by the Toronto Star.

In March, Transport Minister Chrystia Freeland said Ottawa was pausing payments to Tesla in order to investigate the claims it had made.

A spokesperson for Freeland’s office would not offer an update on the Tesla investigation.

Williams said his organization has asked the government to explain what happened with Tesla’s claims.

“Every taxpayer should want to know how Tesla was allowed to game the system over such a short period of time, and were all the rules followed and was there any inside notice given to them,” Williams said.

“We don’t know that, and we’re not alleging that, but we think these are reasonable questions to ask for sure.”

EV sales have sagged since the iZEV program was suspended. EV sales under the program peaked in December 2024 at 18.29 per cent of all new vehicles sold — the last full month before the program was suspended.

Sales fell in January to 11.95 per cent and slid further to 7.53 per cent in April, according to the most recent data from Statistics Canada.

Federal ministers have said the government is working toward bringing back consumer incentives for EVs — a promise also made in the Liberal party’s election platform.

Automakers are warning that sales are slumping further as buyers wait for the rebates to come back.