Tesla’s cheap 94-Mile 3 cost Canadian taxpayers $ 115 million


Earlier this year, we told you about Tesla’s ultra-low Model 3 sold exclusively in Canada. The no-frills EV has just 94 miles (151 kilometers) of range and no autopilot to start. Because of these limitations, Tesla was able to set a price low enough for this particular example to qualify for Canada’s Zero Emission Vehicle Incentive Program (iVZE) ​​and, as a bonus, also qualify the higher Standard Range Plus model. due to the program’s unusual price cap system.

Unsurprisingly, it looks like the 94-mile range Model 3 isn’t a big seller. New data obtained from Transport Canada by The reader shows that just over half a percent of drivers who bought a Model 3 and received Canada’s $ 5,000 iZEV credit actually went for the low-end variant. The workaround cost the Government of Canada – and its taxpayers – millions of dollars to subsidize the purchase price of the most expensive trim that would otherwise not have qualified for the incentive. About 115 million Canadian dollars, to be exact.

What is iZEV credit, anyway?

The Canadian system is very different from the United States’ approach to a federal after-sales tax credit of $ 7,500. Essentially, the arrangement is a $ 5,000 credit used towards the purchase of a qualifying electric vehicle that is applied at the time of purchase – or a lesser amount if the vehicle is a plug-in hybrid vehicle or leased instead of. ‘to be bought. Automakers apply to the Canadian Department of Motor Vehicles, called Transport Canada, for specific models to be considered for the iZEV program. Once the model is approved, buyers can start using the incentive at the time of purchase to reduce their out-of-pocket expenses.

Meat and Potatoes: The base trim for the car should cost less than $ 45,000 (US $ 37,211), but subsequent trim for the same vehicle should not exceed $ 55,000 ($ 45,481). This threshold means that any finish of the same vehicle model can be considered for credit as long as it is below this price cap.

Tesla charges $ 52,990 for the Model 3 Standard Range Plus, however, buyers can choose to limit vehicles to 94 miles (151 km) of range, which brings the price down to $ 46,389. If you remove the $ 1,280 destination charge, the $ 100 air conditioning charge, and the $ 10 Ontario Motor Vehicle Industry Council charge, that brings the purchase price of the Model 3 SR + to just $ 44,999 –a dollar below the threshold to be entitled to the iZEV credit.

In this setup, Tesla drops the “Plus” designation and simply calls the Model 3 Standard Range vehicle, the same name as the previously killed trim sold in the United States. However, the $ 35,000 (in US dollars) Model 3 SR sold in the United States was equipped with a range of 220 miles. The Model 3 SR sold in Canada is priced at CA $ 44,999 (US $ 37,299) and only has 94 miles of range.

This workaround means buyers of the 263 mile Standard Range Plus variant can use iZEV credit. Even more coincidentally, buyers can outfit both Tesla’s with 19-inch sports wheels and a premium white interior for just $ 54,900 (before destination and other charges), which is $ 100 below the threshold of $ 55,000.

Keep in mind that Tesla previously canceled the Model Y’s standard lineup in the United States, fearing its 250-mile range was “unacceptably low.”

In numbers

Last year the Canadian Taxpayers Federation obtained data showing that the standard Model 3 lineup sold a very limited number of cars – 126 between the launch of the iZEV program in May 2019 and March 2020. The reader contacted Transport Canada to verify these numbers and learned that in over a year, only 25 additional units have been sold.

From May 2019 to April 2021, Tesla only sold 151 units of the standard-range Model 3, meaning buyers received $ 755,000 in grants to be used for the lower-range electric vehicle. During this time, he amassed a sale of 22,938 units of the Standard Plus line. That makes a total of 23,089 sales eligible for the iZEV credit, or up to $ 115.5 million paid for a model that would otherwise not have qualified for the incentive.

In total, the iZEV program paid out 87,919 total incentives, of which 26% 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 at 14,413, however, that number is split between six different models, three of which are plug-in hybrids that only receive half the incentive. of $ 5,000 BEV.

Smart or scam?

Not everyone is happy with Tesla’s play on the iZEV incentive. When we reported on the 94-mile Model 3 earlier this year, some called it “super tactical” while others said Tesla’s workaround was “a stupid dodge to get around stupid policy. “.

“It certainly looks like Tesla played with the system by listing a no-frills model just below the maximum price in order to gain access to millions of taxpayer grants for more expensive models,” said Aaron Wudrick, Federal Director of the Canadian Taxpayers Federation in the previous point-of-sale presentation on the standard Tesla Model 3 lineup. “Every day, taxpayers subsidize luxury cars for the richest people. “

As for the DMV’s point of view, Transport Canada had previously denied that it does not assess how an automaker markets its vehicles to consumers, only that it ensures that the eligibility criteria are met. for the iVZE program. Its goal is simply to increase the affordability of battery-electric cars and the overall take-up rate over gasoline equivalents. And judging by the numbers, that’s exactly what he did. The introduction of the Model 3 SR qualified the SR + as otherwise ineligible for iVZE credit, which certainly helped drive the adoption of EVs in Canada.

Whether or not Tesla’s move is remembered as bold or below the belt remains to be seen. But one thing is certain: it worked.

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