Electric Cars

Tesla takes Ontario to court over cancelled EV incentives

The lawsuit focuses on an exception made for traditional dealerships, which Tesla does not use.

Tesla is the only automaker that can't make use of the incentive phase-out exception, so you can see why Tesla's perturbed.

Steven Ewing/Roadshow

Tesla is taking the Ontario government to court over a unique exception in its EV-rebate cancellation that the electric automaker believes discriminates against its way of selling cars.

Tesla has filed a lawsuit against the Canadian province over the termination of an EV incentive program, Reuters reports. Tesla did not immediately return a request for comment, but it confirmed the lawsuit to Reuters while declining to comment further. The Ontario government didn't immediately return a request for comment, but it also declined to comment to Reuters because the issue is already before the court.

Tesla's issue with the cancellation focuses on some exceptions the government made. Ontario's government will allow the incentives to apply to vehicles already on dealership lots or ordered by third-party dealers. Tesla's direct-sales model does not include third-party dealers, and thus the automaker believes it's being discriminated against. The suit wants the exclusion removed entirely.

The incentives allowed residents to receive rebates of up to about CA$14,000 (about US$11,000) on the purchase of an electric or hydrogen vehicle. The incentives were funded by Ontario's cap-and-trade program, which the government also canceled in the name of reducing gas prices.

In the US, there are no dealer-based limitations for federal EV incentives, but Tesla is still losing its eligibility. The company recently surpassed 200,000 sales in the US, which means it will begin to phase out its EV tax credits. The full $7,500 will be available on vehicles delivered through Dec. 31, 2018. After that, it will be halved for two consecutive quarters before disappearing entirely. It's worth noting that this isn't a cash rebate, but rather a dollar-for-dollar reduction on a person's tax liability for the year.