Elon Musk Threatens to Sue Canada After Tesla Was Caught Doing Something Incredibly Sketchy

It's not a great time to be an attorney for Tesla.

In recent months, the floundering electric vehicle company has been bombarded with dozens of lawsuits, like the California class-action that alleges Tesla's manipulated odometers to get out of warranties, or the Australian class-action that alleges the company misled consumers with claims about its so-called "Full Self-Driving" software.

As if that weren't enough for the company's lawyers, Tesla execs are dishing out their fair share of legal threats in return. Following a recent freeze in Canadian EV tax credits, Tesla is now threatening to sue the Canadian government, alleging the move cuts the company off from $30 million in tax credits.

The whole shooting match kicked off back in January, when Canada abruptly stopped issuing rebates under its Incentives for Zero-Emission Vehicles program (iZEV), sending auto dealers and manufacturers into a frenzy. The program was viewed as a major boost for EV sales, offering Canadian consumers up to $3,590 in rebates for qualifying fully-electric and hybrid vehicles.

Later in March, Musk's Tesla came under fire after placing suspicious claims for tens of millions of dollars worth of iZEV rebates right before the January freeze.

Most of those claims came from just four dealers, with a single Tesla showroom in Quebec City claiming it had sold some 4,000 eligible vehicles over a single weekend. Altogether, Tesla filed over 8,600 claims in 72 hours, at a cost of C$43 million (US$30.9 million), or about 60 percent of the remaining iZEV budget.

A few weeks later, Canadian Transport Minister Chrystia Freeland announced a freeze on iZEV payments for Tesla specifically, a move seen as retaliation for Donald Trump's unprecedented tariff threats. In addition, she directed her office to ban the EV giant from eligibility for future tax credit programs so long as "illegitimate and illegal US tariffs are imposed against Canada."

Now, Tesla is claiming that the tax credit freeze was "inappropriate," because "Tesla Canada has been fully compliant with its participation in the program," according to the Toronto Star. The EV mammoth is demanding iZEV payouts start "in the immediate term" for those rebates filed before the January cutoff, despite the fact that they were almost certainly fudged.

If a legal battle kicks off in full, Tesla will have to successfully argue that it was allowed to file rebate claims after vehicles were delivered — a distinction which the Canadian government has evidently flip-flopped on in the past.

While Canada is probably safe to kick back and let Tesla spin its wheels, the EV company needs all the help it can get. As sales tank to record lows around the world, government handouts in the form of EV tax credits — Tesla's bread and butter — have become all but critical if the company wants any hope of surviving.

That said, it'll likely be an uphill battle for the carmaker to claw anything out of the new Canadian government — but even then, there's reason to believe tax credits won't be enough to plug the holes.

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