Tesla’s dominance in electric vehicle (EV) production is poised to yield significant profits from Canada’s new zero-emission vehicle (ZEV) mandates, fueling tensions with traditional automakers. According to a recent analysis, Tesla earned $2.8 billion globally in 2024 from selling compliance credits, a figure that accounted for 40% of its profit. As Canada tightens ZEV regulations, Tesla’s credit revenue is expected to grow, raising concerns about market fairness and local economic impacts.

Canada’s ZEV Mandate Drives Credit Demand

Starting in 2026, Canada will require 20% of light-duty vehicle sales to be zero-emission, escalating to 60% by 2030 and 100% by 2035, reports Automotive News. Automakers failing to meet these targets must purchase credits from competitors like Tesla or face fines of $20,000 per non-compliant vehicle.

Tesla, producing only EVs, generates surplus credits, already selling nearly 32,000 in Quebec alone to brands like BMW and Toyota between 2020 and 2024. With national regulations looming, demand for Tesla’s credits is expected to surge, potentially increasing their value.

Tesla’s Ev Credit Windfall In Canada Sparks Industry Debate

Economic and Competitive Implications

The credit system creates a financial advantage for Tesla, which reported $2.8 billion in global credit revenue in 2024, equivalent to roughly 3.7 billion CAD at current exchange rates. For traditional automakers, buying credits is often the only viable path to compliance.

“It’s really the only option” for many, said David Adams, CEO of the Global Automakers of Canada reportedly, highlighting the lack of scalable EV production among import brands.

However, this reliance increases costs, which may be passed to consumers, potentially raising vehicle prices.

Critics argue the policy disproportionately benefits Tesla, a company with no Canadian assembly plants. Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association, called it “nonsensical” to funnel profits to Tesla, which employs fewer Canadians than legacy automakers. Kingston also criticized Tesla CEO Elon Musk’s “directly hostile” stance toward Canada, referencing Musk’s support for U.S. rhetoric about annexing Canada.

Policy Contradictions and Local Backlash

Canada’s ZEV mandate contrasts with other policies targeting Tesla. In March 2025, Transport Minister Chrystia Freeland announced Tesla’s ineligibility for federal EV incentives until U.S. tariffs, deemed “illegitimate and illegal,” are lifted. Provincial rebate programs also excluded Tesla this spring amid backlash against Musk’s comments. These moves aim to curb Tesla’s financial gains, yet the ZEV credit system inadvertently bolsters its revenue, creating a policy paradox.

Industry and Regulatory Outlook

The ZEV mandate reflects Canada’s push for cleaner transportation, aligning with global trends toward electrification. However, the credit system’s structure raises questions about fairness and long-term impacts on Canada’s auto industry, which employs thousands in manufacturing.

Kingston warned that enriching Tesla undermines local workers and contradicts Ottawa’s resistance to aggressive U.S. trade policies. As automakers invest in EV production—Ford plans a new EV plant in Ontario by 2027—the reliance on credits may wane, but Tesla’s head start ensures it remains a key player.

Tesla’s credit revenue highlights the complexities of transitioning to EVs. While the policy accelerates decarbonization, it sparks debate over economic equity and national priorities. As Canada balances environmental goals with industry concerns, the ZEV mandate’s ripple effects will shape the EV market for years to come.

Photos reproduites avec l'aimable autorisation de Tesla.