Tesla’s sales problems have taken a sharp turn in Canada, with new data showing an over 85% collapse in vehicle registrations in Quebec in the first quarter of 2025—a dramatic reversal for what has been one of the province’s most popular EV brands.
Between January and March, just 524 new Tesla vehicles were registered in Quebec, a sharp plunge from the 5,097 units recorded in the last quarter of 2024. The Model Y, Tesla’s flagship SUV and global bestseller, accounted for the largest drop—falling from 3,274 units to 360. Meanwhile, the Model 3, Tesla’s entry-level sedan, nosedived by 94%, with just 96 units registered.
While auto sales tend to taper off in the first quarter of any year, the scale of Tesla’s decline in Quebec points to problems far beyond seasonal norms. The crash in numbers aligns with similar declines in European markets, where Tesla’s sales fell nearly 50% in April, even as EV demand rose across the board.
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In both regions, industry analysts suggest the issue is no longer the market but the brand itself.
In China—Tesla’s second-largest market after the United States—the company has been steadily losing ground to domestic EV manufacturers like BYD, Nio, and Li Auto. BYD, in particular, overtook Tesla in global EV sales at the end of 2023 and has continued to extend its lead in 2024 and 2025.
Chinese carmakers, buoyed by government support and lower production costs, are offering better range and pricing, undercutting Tesla in a market where affordability and nationalism now drive consumer decisions. Tesla has also had to reduce production at its Shanghai Gigafactory due to sluggish local demand and intensified competition.
Rebate Freeze and Trade Fallout
At the heart of Tesla’s troubles in Canada is a sweeping rebate freeze imposed by the federal government. Transport Minister Chrystia Freeland halted all federal EV rebates to Tesla buyers in March after a sudden surge in claims, from an average of 300 to nearly 5,800 per day, raised red flags over possible manipulation or bulk-buying schemes.
Freeland also confirmed that Tesla will be excluded from future incentives for as long as U.S. President Donald Trump’s 25% tariffs on Canadian goods remain in place. Tesla, being an American manufacturer, is caught squarely in the crossfire of the escalating trade tensions between Ottawa and Washington.
Adding to the blow, several provinces—British Columbia, Prince Edward Island, and Manitoba—have also delisted Tesla vehicles from their local EV incentive programs, effectively stripping the brand of much of its affordability appeal in key Canadian markets.
Now, Tesla’s crisis has spread to Canada, right on the doorstep of the United States, where it remains the dominant EV maker. The sharp decline in Quebec, Tesla’s most robust Canadian market, marks a significant erosion of its North American stronghold.
Brand Trouble From Musk’s Politics
Tesla’s fall in Quebec isn’t just economic—it’s political. The company is navigating a growing global backlash fueled by its controversial CEO Elon Musk. His public endorsements of European far-right parties, including Germany’s AfD and Britain’s Reform UK, have alienated many progressive-leaning buyers, especially in regions like Quebec where liberal politics dominate.
In North America, Musk’s brief tenure as head of the U.S. Department of Government Efficiency (DOGE) has further stirred controversy. Though he announced last month that he was stepping down from the role—citing the federal law that limits government service for “special employees” to 130 days per year—Tesla dealerships across a dozen U.S. states had already been targeted by protestors and vandalized during his stint.
Musk’s heavy involvement in U.S. politics, including nearly $300 million in donations during the 2024 presidential race, has not only put him at the center of partisan fights but is increasingly seen as a liability for Tesla’s global consumer brand.
Turning the Page?
Tesla shares began to rebound in April after Musk announced he would step back from political engagements and “spend 24/7 at work” on his businesses. In recent interviews—including one with Bloomberg at the Qatar Economic Forum—he signaled that his days of bankrolling U.S. politics are behind him, calling his 2024 spending spree a “mistake.”
But reversing the damage may take more than a few press statements. With rebates frozen, regulatory scrutiny rising, and brand sentiment dipping in regions where Tesla once thrived, the company faces a tough road to win back both governments and consumers.
However, some analysts and investors believe Tesla’s fundamentals remain strong and that the current troubles are temporary. The company has a vast charging infrastructure, a technological lead in battery software, and an expanding footprint in energy storage and AI. But confidence hinges on one variable: Elon Musk’s ability and willingness to step away from politics.
In other words, Tesla’s rebound will depend not only on correcting its sales figures but also on restoring its image with customers disillusioned by politics.