Tesla v. The Ontario Government: A Saga

The new premier of Ontario, Doug Ford, found himself in quite the legal battle with Elon Musk’s company Tesla.

/ 15 min read

The new premier of Ontario, Doug Ford, found himself in quite the legal battle with Elon Musk’s company Tesla.

Elected on promises of cutting spending and reducing tax rates, Ford may have gone too far when his government unlawfully scrapped subsidies that provided rebates for buyers of Tesla’s electric vehicles this past summer.

Why Tesla was Different

When the government originally announced the end of the rebate program, it promised to honour it for vehicles that were bought from a dealership, delivered and registered by September 10th, 2018.

Tesla differs from other car manufacturers, such as Toyota and General Motors, in that the company sells cars directly to customers, effectively ensuring the blow of the policy change would hit them immediately.

Over 600 Ontario Tesla customers were expecting government rebates of up to $14,000 for their vehicles that were already ordered but not yet delivered, and were affected directly by the decision.

The Lawsuit

Not a company to back down from a challenge, Tesla sued the Ontario government, claiming unfair treatment, as customers of other manufacturers were still eligible to receive their rebates during the transitional period.

In a statement from Tesla, the company said, “The decision has already inflicted substantial harm on Tesla Canada in the form of lost sales and the creation of an impression among Ontarians that Tesla Canada may be singled out for future arbitrary treatment under the law.”

Furthermore, Tesla requested that the Ontario Superior Court rescind the “arbitrary and entirely unreasonable” move made by Ford.

The Results

Superior Court Justice Frederick Myers went on to rule that Tesla Motors Canada was, in fact, correct in stating that they received unfair treatment from the Ontario government.

In his 17-page ruling, Myers wrote, “If the government wants to transition out of the electric car subsidy program, [Transportation Minister John Yakabuski] must exercise his operational discretion in a lawful manner,” going on to write “He has yet to do so. I therefore quash and set aside the Minister’s unlawful exercises of discretion to implement the transition program.”

Finally, Myers’ ruling included that Ontario must pay Tesla $125,000 to cover any legal costs, a lawful decision based on the pillars that our country’s legal system rests greatly upon.

The article in this client update provides general information and should not be relied on as legal advice or opinion.

The decision referenced above is cited as Tesla Motors Canada ULC v. Ontario (Ministry of Transportation), 2018 ONSC 5062 (CanLII)