‘Substantial and unjustified harm’: Tesla takes Manitoba government to court over EV rebate exclusion

A Tesla vehicle charges at a station in this undated file image. Tesla Motors Canada ULC has filed a legal challenge against the Manitoba government after the province excluded Tesla from its electric vehicle rebate program — a decision announced in March 2025. (File)

A subsidiary of electric vehicle manufacturer Tesla has launched a legal challenge against the Manitoba government, seeking to overturn its exclusion from the province’s electric vehicle rebate program.

Tesla Motors Canada ULC filed a notice of application on May 29 in the Court of King’s Bench of Manitoba, alleging the exclusion is “unreasonable and procedurally unfair” and inconsistent with the program’s stated objectives. Tesla Motors Canada ULC is a subsidiary of Tesla Inc.

The NDP government introduced the EV rebate program in 2024, offering rebates of up to $4,000 on electric vehicles priced up to $70,000—retroactive to August 2023—with the goal of helping Manitobans transition to electric or plug-in hybrid vehicles and reducing greenhouse gas emissions.

The legal challenge centres on the province’s decision to remove Tesla vehicles from the program, announced in March 2025 ahead of the upcoming budget. As of Monday, the province’s EV rebate website lists Teslas and EVs manufactured in China purchased after March 19, 2025 as ineligible.

The filing names the Government of Manitoba, the ministers of justice, environment and climate change, and finance, as well as Manitoba Public Insurance Corporation, as respondents.

Tesla Canada is seeking judicial review of the March 2025 decision that excluded the company from the upcoming fiscal year’s program and a follow-up decision in March 2026 extending that exclusion into the year after.

The company is also asking the court to set aside the exclusion, order respondents to remove all references to it from their websites within 14 days, and declare that Tesla purchases that would otherwise have qualified under the program remain eligible.

‘Procedurally unfair’: Court filing

According to the filing, Tesla Canada has received no formal statement from the Manitoba government explaining the rationale for the exclusion, nor was it notified or permitted to make submissions prior to the decision.

It adds that the Manitoba government has suggested, based on media reports filed as exhibits, that the exclusion was made “in order to be ‘elbows up’ in relation to the United States of America.”

However, the filing says Tesla Canada is a Nova Scotia corporation extraprovincially registered in Manitoba since 2011. It adds the company does not carry on business in the United States and has no role or involvement with the current U.S. federal administration.

“If the exclusion was made for political purposes relating to the United States (and Tesla Canada does not know whether this was in fact the case), the Manitoba Government is not empowered to administer the Manitoba EV rebate program for political purposes unrelated to, and which undermine, the stated program objectives,” the filing reads.

Premier Wab Kinew had previously said the government would only consider reversing its decision if the United States drops its tariffs on Canadian goods. Tesla CEO Elon Musk served as a senior adviser to U.S. President Donald Trump.

“We have a simple message to them—Elon, get Donald Trump to stop the tariffs, and then we can talk about the EV rebates,” Kinew said in question period last week.

The filing argues the exclusion fails to meet the standard of reasonableness because it is inconsistent with the program’s stated purposes and objectives. It says the exclusion has “unfairly and unreasonably” deprived Manitobans who purchased qualifying Tesla vehicles since March 2025 of at least $560,000 in cumulative lost rebates.

“The Manitoba government is pursuing unarticulated, improper ‘shadow’ objectives to the direct detriment of a Canadian corporate citizen and Manitobans more broadly,” the notice of application reads.

It alleges that the province has chosen to “deliberately and individually target” a Canadian corporation’s business activities in Manitoba without procedural fairness or proper purpose.

According to an affidavit signed by Dustin Leitch, corporate director of Tesla Motors Canada ULC, Tesla vehicles are among the most energy-efficient in the North American automotive market and produce zero tailpipe emissions.

The affidavit states Tesla Canada carries on business in eight provinces — including a Tesla store in Winnipeg — with more than 1,500 direct Canadian-based employees as of December 2025.

It also notes that at least three manufacturers currently eligible under the rebate program are incorporated in, based in, or have their head office in the United States and that at least 11 EVs currently eligible under the program are manufactured there.

Expedited hearing sought

The filing is also seeking an order for an expedited hearing, noting that the government has not confirmed whether the rebate program will be extended beyond the current fiscal year, which ends March 31, 2027. Without an expedited hearing, the application will “have little practical utility for Manitobans,” it says.

Tesla Canada did not initially pursue a judicial review of the 2025 exclusion because counter-tariffs imposed by the federal government in April 2025 had priced its vehicles out of the provincial rebate program, the filing says. That changed in September 2025, when it says the company began selling German-manufactured EVs in Manitoba that would have qualified under the program were it not for the exclusion.

As a result of the exclusion, the filing says Tesla Canada has suffered “substantial and unjustified harm,” including lost market share, reputational harm, and lost opportunity to build customer loyalty.

A provincial spokesperson declined to comment as it is before the courts.

An MPI spokesperson said the provincial government determines all program guidelines and eligibility decisions and that MPI administers the rebate program on its behalf.

None of the respondents have filed court responses of their own. A first hearing in the matter is set for June 11.

None of the claims have been tested in court.

With files from The Canadian Press