Tesla's Cheap 94-Mile Model 3 Has Cost Canadian Taxpayers $115 Million
Earlier this year, we told you about Tesla's ultra-low range Model 3 sold exclusively in Canada. The no-frills EV has only 94 miles (151 kilometers) of range and no Autopilot to boot. Thanks to these limitations, Tesla was able to price this particular example low enough to qualify for Canada's Incentives for Zero-Emission Vehicles (iZEV) program—and as an added bonus, qualify the higher-up Standard Range Plus model as well due to the program's unusual price cap system.
Unsurprisingly, it appears that the 94-mile range Model 3 isn't a big seller. New data obtained from Transport Canada by The Drive shows that just over one-half of a percent of drivers who purchased a Model 3 and received Canada's $5,000 iZEV credit actually sprung for the low-range variant. The workaround has cost the government of Canada—and its taxpayers—millions of dollars to subsidize the purchase price of the more expensive trim that would have otherwise not qualified for the incentive. About $115 million CAD, to be exact.
Canada's system is quite different than the United States' approach to a $7,500 post-sale federal tax credit. Essentially, the arrangement is a $5,000 credit used towards the purchase of a qualifying electric vehicle which is applied at the time of purchase—or a lesser amount if the vehicle is a plug-in hybrid or leased instead of purchased. Automakers submit an application to Canada's department of motor vehicles, called Transport Canada, for specific models to be considered for the iZEV program. Once the model is approved, buyers can begin utilizing the incentive at the time of purchase to reduce their out-of-pocket expenses.
