Toronto halts Tesla EV incentives amid US trade tensions

Trade tensions influence policy

Toronto Mayor Olivia Chow announced the exclusion of Tesla vehicles from the incentive program during a news conference on March 17, 2025. Chow indicated that the decision is a direct response to US President Donald Trump's recent tariffs on Canadian products and his controversial remarks regarding Canada's sovereignty and his desire to annex Canada and make it the 51st state.

Chow emphasized that while individuals can still purchase Teslas, taxpayer money will not subsidize these purchases amid current trade issues.

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Tesla's challenges in 2025 under Trump's second term

Tesla has faced a turbulent year since Donald Trump began his second term as US president in January 2025. One of the most controversial aspects of the new administration has been Elon Musk's advisory role in shaping US technology and infrastructure policies. While Musk has long been an advocate for innovation, his alignment with Trump's administration has drawn backlash from both Tesla customers and investors.

Public sentiment toward Tesla has shifted as Musk's involvement in politics has grown. Many long-time Tesla supporters, who initially saw the brand as a champion of clean energy and sustainability, have expressed frustration over Musk's increasing political engagement. His vocal support of deregulation policies and push for fewer government restrictions on business operations have led to concerns that Tesla is moving away from its original mission.

At the same time, Tesla's financial performance has been under pressure. The company's stock has lost nearly half its value over the past three months, reflecting growing investor unease.

This decline has had a direct impact on Musk's wealth; his net worth fell below $400 billion for the first time in two months, dropping from an all-time high of $486.4 billion in December 2024, "dragged down by a double-digit slide in Tesla Inc.’s share price," Bloomberg reported.

Consumer hesitation has been evident, particularly in liberal-leaning US states and cities that were once strongholds for Tesla. In response, competitors such as Rivian, Lucid Motors and traditional automakers with expanding EV lineups have gained market share.

The Canadian market, which has historically been receptive to Tesla vehicles, is now also experiencing a shift as political tensions influence buying decisions.

Toronto's decision to exclude Tesla from its EV incentives highlights the growing divide between Musk's political associations and the policies of cities and countries focused on sustainability. As the EV industry continues to expand, Tesla's ability to maintain its dominance may depend on how it navigates these political and public relations challenges.

Impact on EV market and future outlook

While the financial impact of this exclusion is expected to be minimal, the symbolic gesture underscores the city's stance on international trade relations affecting local policies. Drivers and fleet operators are now encouraged to consider alternative EV options for their services.

The long-term effects on Tesla's market share in Toronto's EV sector remain to be seen, especially if trade tensions persist.

Sources

1. Wall Street Journal: Tesla’s Stock Still Isn’t Cheap (March 13, 2025)

2. Bloomberg: >Musk's Net Worth Falls Below $400 Billion For First Time in 2025 (February 10, 2025)