Sunita Somvanshi
Tesla has dramatically reduced the price of its Model Y in Canada by $20,000, bringing the electric SUV’s cost down to $64,990 from $84,990. This major price cut comes as the automaker faces significant sales challenges in the Canadian market and signals a strategic shift in how Tesla exports vehicles to Canada.
The new price is even $5,000 below what Tesla charged before tariffs took effect in April 2025, making the Model Y much more affordable for Canadian buyers. This aggressive pricing move follows a period of steep sales decline for Tesla in Canada.
Why Tesla Needed to Act
Tesla’s sales in Canada have virtually disappeared in recent months due to multiple challenges. According to S&P Global Mobility data, Tesla registrations in Canada dropped by 67% in the first half of 2025 compared to the same period in 2024, falling from over 26,000 units to just around 9,000
The situation was even worse in Quebec, where Tesla sales plummeted 85% in the first quarter of 2025 compared to the final quarter of 2024. Model Y registrations specifically fell by 89% during this period
Several factors triggered this sales collapse. In April 2025, Canada imposed 25% counter-tariffs on U.S.-built vehicles in response to similar measures from the United States. This forced Tesla to raise prices across its lineup by 13-22%, with the Model Y Long Range AWD jumping from $69,990 to $84,990.
Adding to Tesla’s troubles, the federal government’s incentive program ended abruptly in January 2025, and Quebec’s program was suspended in February and March. These changes made Teslas much less affordable for Canadian consumers.
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Importing from Berlin Instead of the U.S.
The dramatic price cut appears possible because Tesla is now importing Model Y vehicles for Canada from its factory in Berlin, Germany, rather than from U.S. factories. This strategy helps Tesla avoid the 25% tariffs on U.S.-made vehicles.
Several clues point to this change:
- Only Model Y prices were reduced, while all other Tesla vehicles still have tariff pricing.
- New Model Y orders now have delivery dates in September or October 2025, much longer than usual for cars made in the U.S.
- Canadian buyers can now get the “Diamond Black” paint color, which was previously only available on cars made in Berlin.
Importing from Tesla’s Shanghai factory isn’t an option because Canada placed 100% tariffs on Chinese-made electric vehicles last year.
Qualifying for Rebates Again
The price cut has another benefit: at $64,990, the Model Y now qualifies for provincial incentives that were previously out of reach. In Quebec, the vehicle now falls below the $65,000 limit for the “Roulez vert” program, making buyers eligible for a $4,000 rebate.
Cleared of Fraud Allegations
In related news, Transport Canada has completed its investigation into Tesla’s iZEV rebate claims and found no evidence of fraud. The investigation began after Tesla submitted claims for over 8,000 deliveries in a single weekend in January, totaling $43.2 million CAD. Officials confirmed these claims legitimately represented cars sold before the January 12 cutoff date.
Tesla’s $20,000 price cut represents a bold attempt to win back Canadian customers by making its popular Model Y more affordable while navigating complex tariffs, changing incentives, and shifting consumer preferences. This move comes as competitors like BYD continue to advance their electric vehicle technologies.
