Tesla just dropped a bombshell on their Canadian fans. The electric vehicle maker sent an email this week to all Model Y Long Range reservation holders north of the border, telling them their orders for the long-range version of the SUV manufactured in Fremont, California have been scrapped. Customers are being given the option to switch to the standard range Model Y built in Shanghai, China if they act fast. Tesla is pulling the plug on the American-made Model Y option in Canada by June 23rd.
Last month, Tesla started selling the made-in-China Model 3 and Model Y in Canada. While it’s not clear exactly how many Shanghai-built Teslas have made their way into Canadians’ hands so far, the first batch has been delivered. This move to nix the Cali-constructed Model Y and push the Chinese model may help Tesla maximize incentives and keep costs down.
Tesla’s Shanghai Gigafactory-produced vehicles exported to overseas markets may help the company sell its US-made vehicles in the US, as they are eligible for potential tax incentives of up to $7,500 under the US government’s subsidy program (Tesla Model 3 now cheaper than Toyota Camry in California after tax incentives). However, Tesla faces increasingly fierce competition in price and functionality from Chinese electric vehicle manufacturers. Meanwhile, Tesla’s Berlin factory is increasing production of the Model Y for European customers.
The Chinese-built Model Y starts at around 62k in Canadian dollars, which is a 22% markup from what an equivalent model would’ve cost before China’s EV promotion policies. Since Canada’s EV rebates aren’t tied to where the vehicles are made, Tesla can export the China-built Model 3 and Model Y to Canada and still have customers qualify for the subsidies.
Tesla uses codes in their VINs (vehicle identification numbers) to show where their cars are produced. Models from the Shanghai factory all start with “LRW”, so you can tell the Model 3 and Model Y now selling in Canada are made in China. Pushing into the Canadian market with Shanghai-built vehicles could help Tesla gain more ground in North America and open up a new market for their China operation.
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