Tesla’s affordable 94-mile Model 3 has cost Canadian taxpayers $ 115 million
Earlier this year we told you about Tesla’s Ultra Low Range Model 3, which is only sold in Canada. The no-frills EV only has 94 miles (151 kilometers) range and no autopilot on top of that. Thanks to these limitations, Tesla was able to set the price for this particular example low enough to qualify for Canada’s Incentives for Zero-Emission Vehicles (iZEV) program – and as an added bonus, the higher-quality Standard Range Plus model due to the unusual price -Cap system of the program.
Unsurprisingly, the Model 3 is not a best seller with a range of 94 miles. New data from Transport Canada from The drive shows that just over half a percent of drivers who bought a Model 3 and received Canada’s $ 5,000 iZEV credit actually sprang for the low-range variant. The workaround has cost the Canadian government – and its taxpayers – millions of dollars to subsidize the purchase price of more expensive equipment that otherwise would not have been eligible for the incentive. About CAD 115 million to be precise.
What is the iZEV loan anyway?
Canada’s system is very different from the United States’ approach to a federal tax credit of $ 7,500. Essentially, the agreement is a $ 5,000 credit that is used towards the purchase of a qualifying electric vehicle and applied at the time of purchase – or a lesser amount if the vehicle is a plug-in hybrid or leased instead of bought. Automakers submit an application to Canada’s Department of Motor Vehicles, named Transport Canada, for certain models that are being considered for the iZEV program. Once the model is approved, buyers can take advantage of the time of purchase incentive to reduce their out-of-pocket expenses.
The Meat and the Potatoes: The basic car must be less than $ 45,000 ($ 37,211), but subsequent panels of the same vehicle cannot exceed $ 55,000 ($ 45,481). This threshold value means that any equipment of the same vehicle model can be taken into account for the credit, as long as it is below this upper price limit.
Tesla charges $ 52,990 for the Model 3 Standard Range Plus, but buyers can choose to limit the vehicle’s range to 94 miles (151 km), which brings the price down to $ 46,389. If you remove the target fee of $ 1,280, A / C fee of $ 100, and a $ 10 Ontario Motor Vehicle Industry Council fee, the Model 3 SR + purchase price increases to just $ 44,999.one dollar below the cut-off to qualify for the iZEV credit.
In this configuration, Tesla drops the “plus” designation and only calls the vehicle Model 3 Standard Range – the same name as the panel previously sold in the US. However, the Model 3 SR sold in the US for $ 35,000 (in US dollars) was equipped with a range of 220 miles. The Model 3 SR sold in Canada costs $ 44,999 ($ 37,299) and has a range of just 94 miles.
This workaround means that buyers of the 263-mile Standard Range Plus variant can use the iZEV credit. Even more coincidentally, buyers can outfit both Teslas with the 19-inch sport rims and premium white interior for just $ 54,900 (pre-destination and other fees) – $ 100 less than the cut-off of $ 55,000.
Recall that Tesla previously canceled the Model Y Standard Range in the US over concerns that its 250 mile range would be “unacceptably low”.
With the numbers
Last year the Canadian Taxpayers Association Data received showing that the Model 3 Standard Range sold a very limited number of cars – 126 between the time the iZEV program started in May 2019 to March 2020. The drive turned to Transport Canada for these numbers and learned that only 25 additional units had been sold in over a year.
From May 2019 to April 2021, Tesla sold just 151 units of the Standard Range Model 3, meaning buyers received $ 755,000 in subsidies for using lower-priced electric vehicles. In the meantime, 22,938 units of the Standard Range Plus have been sold. That means a total of 23,089 sales qualify for the iZEV loan, or up to $ 115.5 million paid out on a model that otherwise would not have qualified for the incentive.
In total, the iZEV program paid out 87,919 incentives, 26 percent of which went to Tesla Model 3s – more than Audi, BMW, Chrysler, Ford, Honda, Mini, Mitsubishi, Nissan, Smart, Subaru and Volkswagen combined. The automaker that had the vehicles with the second highest number of incentives is Hyundai with 14,413. However, that number breaks down across six different models, three of which are plug-in hybrids that receive only half of the $ 5,000 BEV incentive.
Smart or Fraud?
Not everyone is enthusiastic about Tesla’s games of the iZEV incentive. When we reported on the 94-mile Model 3 earlier this year, some called it “a great tactic” while others said Tesla’s workaround was “a stupid trick to bypass a stupid policy.”
“It definitely looks like Tesla has tricked the system by listing a no-frills model just below the maximum price in order to gain access to taxpayers’ subsidies in the millions for higher-priced models,” said Aaron Wudrick, federal director of the Canadian Taxpayers Federation during the previous synopsis of the outlet on the Tesla Model 3 Standard Range. “Everyday taxpayers subsidize fancy cars for wealthier people.”
From the DMV’s point of view, Transport Canada had previously refuted the fact that it does not assess how an automaker markets its vehicles to consumers, but only ensures that the admission criteria for the iZEV program are met. Its goal is simply to increase the affordability of battery electric cars and the overall decline rate compared to gasoline-powered equivalents. And judging by the numbers, it did just that. The introduction of the Model 3 SR qualified the otherwise ineligible SR + for the iZEV loan, which certainly helped boost the adoption of electric vehicles in Canada.
Whether Tesla’s move will be remembered as brave or below the belt remains to be seen. But one thing is certain: it worked.
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