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Massive pricing discrepancy between Canada and the US??? Why $15,000 more in Canada?

Massive pricing discrepancy between Canada and the US??? Why $15,000 more in Canada?

Why is there such a massive pricing discrepancy between Canada and the US? Honestly, it can't cost $15,000 more just to drive it across the border. Add to that our increased sales tax and the added luxury car tax it brings the base model close to $100,000!!! It doesn't make any sense, the exchange rate is only 1,04 today and has held to parity for the past 4 years... so it can't be hedging against currency fluctuation. If this is all gov't screwing us with customs duties and tariffs then I would like Tesla to provide a breakdown to this discrepancy so I can take this to my MP... this is beyond ridiculous. A $62,000 car in the US should not have a 25% increase to become a 77,000 car in another country unless some serious illegal business is going down.

Thomas N. | October 15, 2013

It's a penalty the US extracts from Canada for over-usage of the word "Eh".

pgiralt | October 15, 2013

From a previous thread:

“Pricing in foreign markets can be very complex, so we have taken a very straightforward, transparent approach to pricing Model S,” said George Blankenship, vice president worldwide sales and ownership experience. “Canadian base prices start with U.S. pricing, plus 6.1 percent for import duties and an additional 1.5 to 2 percent, depending upon the model, for incremental transportation costs and country specific business expenses. The total is then adjusted using the current mid-term currency exchange rate.”

So the biggest difference is the import duties Tesla has to pay to Canada.

Thomas N. | October 15, 2013

Plus the "Eh" thingy.....

shop | October 15, 2013

There is nothing illegal. The main difference is duty/tarrifs/taxes. By all means, complain to your MP. It won't do any good, the government likes its duties and taxes. Not only does it generate revenues for the government, it also encourages manufacturers to set up manufacturing lines in Canada. Of course in the meanwhile, Canadian consumers get screwed, I mean, get to pay the government more money.

shop | October 15, 2013

Also the Model S does not cost $62,000 in the US. That's after a $7,500 federal tax credit. The actual price without federal tax credit is $70,000.

Luclyluciano | October 15, 2013

So free trade is not free trade?

Carefree | October 15, 2013

Have you compared other car manufacturer's prices between the US and Canada? It is the exact same thing. Don't blame Tesla, yell at your government! And as shop said, you are comparing apples with oranges.

shop | October 15, 2013

Free trade? NAFTA was carefully negotiated to help certain manufacturers and hinder others. It is complex legislation.

hsadler | October 15, 2013

Don't forget to add state taxes (for most states) which is not included on Tesla's web sight.

dramingly | October 15, 2013

Isn't this mostly due to taxes and tariffs? I think most US cars go for at least double in China.

NKYTA | October 15, 2013

OP it is taxes. NAFTA was a neat idea...well...

@Thomas N.
Funny (with two N's)! :-)
I love our northern neighbors but to me it sounds more like "ay" to me. "Eh" is whatever in lots of british-based dialects (or worse "meh"). Not that I'm a scholar - just enjoyed the chuckle and the grin.

Here is the Telsa grin, again. :-)

Captain_Zap | October 15, 2013

Here is an old thread with an explanation from GeorgeB.

http://www.teslamotors.com/forum/forums/canadian-pricing-out-i-am-tears

Andrzej1 | October 15, 2013

Actually the price difference is quite small. The Tesla US website is misleading in that the 63,570 reflects a $7500 Federal tax credit which one may claim at a later date if one has sufficient income. At the time of purchase one must pay $71,070 plus $1500 for the leather seats which are standard in Canada. So the grand total in the US is $72,570. At today’s exchange rate of 1.04 this works out to $75,472.80 CAD. Now if you were to import it, you would have to pay duty at a rate of 6.1% which applied to the above price would bring the total to $78,491.71 CAD. The price listed on Tesla's Canadian web-page today is $78,970.00 CAD or about $478 dollars more then the US. In fact if you price a better equipped version you may find it even cheaper in Canada then the US. This is because Tesla does not pay duty on the MSRP but on the manufacturer's import price which in some industries is a mere pittance in relation to the MSRP. Furthermore, since the Tesla Model S is not NAFTA qualified, it is eligible for drawback from the US Govt. which effectively further reduces the 6.1%.

Where Tesla falls short is not including the Model S on the RIV. Given that Tesla is giving Canadians fair pricing, not unlike most ICE companies who on some of their ultra-premium models have been known to rip-off Canadians for tens of thousands, this is totally bizarre! TM has gone to the trouble of placing the Model S on the pre-clearance list and offers a North-American warranty and fair pricing but refuses to place it on the RIV. Why?

The effect of Tesla's action is that it denies anyone including Canadians who are living temporarily in the US from bringing their Model S across the border with them if they return to Canada since, by not being on the RIV, the Model S is inadmissible into Canada for individual importation.

Andrzej1 | October 15, 2013

I forgot to add that I have noticed some Canadian interest on this forum for slightly used Model S cars which are equally not admissible to Canada. If you bought one you would have to wait fifteen years, at which time the RIV would not apply and you could then import it as an antique!

Brian H | October 15, 2013

The FTA requires a certain %, currently 65%, manufactured in the country selling (gradually increased from original 55%). The MS has only 55% (because of the battery).

gill_sans | October 15, 2013

Maybe it's a tar sands tax, eh?

jbunn | October 16, 2013

It costs more in Canada because the car has a top speed of 200 kph in the Canadian configuration. The US configuration only goes 120 mph.

Car t man | October 16, 2013

You can currently easily import any ICE, because they are all already an antique. No need to wait for 15 years :)

And another +1 for the Ey

Andre-nl | October 16, 2013

Andrzej1, +1

Chad:

"A $62,000 car in the US should not have a 25% increase to become a 77,000 car in another country unless some serious illegal business is going down."

Chad, please tell us what is illegal in manufacturers setting different prices for different markets.

J.T. | October 16, 2013

When national chain stores advertise their prices they always exclude Alaska and Hawaii because it costs more to get it there. If Tesla has to pay more to get it to Canada then why is it so abhorrent that they charge more?

Luclyluciano | October 16, 2013

Yup! Huge differences. Currently there is a slightly used p85 for sale on Tesla Motors Club website for $98,000. It's in Detroit which is within driving distance, 350 kms but I'm not allowed to import. He is also including a set of 19 inch winter tires and rims along with the turbines.

Here in the GTA, same car is $130,000 new.

church70 | October 16, 2013

+1 Andrzej1 and thx Tesla for the love from Canada : )
Love my ms 85

Rob C | October 16, 2013

Cars manufactured in the USA are not subject to duty in Canada. (unlike the 6.5% duty if made in Japan).

I think it's because multi-national manufactures (i.e. Tesla) have separate entities (i.e. Tesla Canada) that buy from the parent company. Tesla Canada may not have the buying volume to warrant the same pricing structure as Tesla USA.

There is the same discrepancy with other auto manufactures, but this difference is very significant, and seemingly unwarranted to the extent it is.

Kaboom | October 16, 2013

When the dollar hit parity few years ago there was an abundance of nearly new cars being imported from the states for resale in canada. The canadian dealerships were losing sales bigtime, so they were forced to bring prices more in line with the US.

The MS price in canada is right where it should be. I would love it to be cheaper, but there is a cost to shippping a vehicle larger distances, and the US dollar has a 4% edge on the loonie right now. I can't complain.

Other luxury car brands are also offering reasonable comparable prices to the US equivalent right now.

shop | October 16, 2013

@Rob C, that isn't correct. Tesla does pay import duties. Please get your "facts" correct.

alcassfast | October 16, 2013

If I buy an ev before March 1, 2014, I get a $5000.00 rebate. And, a grant that pays for installation of a level 2 charger at home.

Brian H | October 16, 2013

Base: $70K
Cdn: $77K
10% difference.
_______________
6.5% import duty.
~1.5% currency
~1% transportation
~1% homologation (regulatory modifications)
___
10%
===

Rob C | October 16, 2013

Hey Shop ... you may be correct. Sounds like you may be having a bad day. Sorry if I made it worse. I was basing my comment on my experience in importing a Lexus into Canada. At that time, I was told that cars manufactured in the USA are exempt from duty, but cars manufactured outside of USA are subject to the duty.

I have no other basis to make the claim that there was no import duties other than that experience.

Do you know (factually of course) what the rate is?

shop | October 16, 2013

"At that time, I was told that cars manufactured in the USA are exempt from duty, but cars manufactured outside of USA are subject to the duty.". Read comments above - car has to have 65% parts manufactured in north america for it to be duty free, the model S is around 55% (due to the battery).

Kaboom | October 16, 2013

@brian

At the current exchange rate, which is closer to 4%, i think us canadians are getting a bit of a break.

Although, i do think those of us who are financing are getting raw end at 4% instead of 1.6% for the states. But i guess that rate is up to the banks and credit unions over which TSLA has little control.

Christianjacques | October 16, 2013

there is no IMPORT DUTY. This is part of the FREE trade agrement. All vehicule build in the USA you don't have to pay the import DUTY, if the car is build in Japan or Germany or else where there a 6.5% import duty taxe add it.

Example
2010 model year automobile
Purchase price
(includes invoice price and state taxes) US $50,000
Value for duty (price converted to Canadian currency at
current rate of exchange: $50,000.00 x 1.05*)

CAN $52,500
Duty at 0% (as you can see 0 $ for duty) $ 0
Excise tax on air conditioner $100
Excise tax on Green Levy $1,000
$1,100 $1,100
Value for tax (value + duty + excise tax) $53,600
GST ($53,600 × 5%) gouvernement sale taxe $2,680
Total cost $56,280
Total taxes paid to CBSA $3,780

Andrzej1 | October 16, 2013

@Rob C

The duty free status is a qualified one. To meet it the auto manufacturer is required to have a minimum level of North-American content. The content requirement was raised when Mexico entered into NAFTA. Both the US and Canada feared a loss of auto jobs to Mexico and raised the content level to stem the anticipated job loss. Of course these protectionist measures failed as all protectionist measures do over time and both the US and Canada have experienced auto job losses under NAFTA and Mexico has enjoyed significant gains.

Given that Canada is about to conclude a free trade agreement with the EU, it is quite possible that Canada will lift the 6.1% duty for cars entirely. One must remember a few years back when the Government of Canada proposed lifting the 6.1% tariff, the Big Three and their Unions threw a hissy fit and threatened to move a good chunk of the auto industry South. The Canadian Government in response withdrew the proposal but some of the auto industry reneged on the implicit understanding that it would keep the jobs in Canada and moved some of the jobs South anyways ie. GM will shrink to half its former size in Canada.

Clearly the clout of the Big Three has diminished significantly and lifting the 6.1% tariff would fit nicely with the ruling Conservative's parliamentary focus this Session being of placing the consumer first.

shop | October 16, 2013

Sorry for the veer into Canadian government policy here, but do you know other ways the Canadian government has changed policy to put the consumer first? Or if this is a new focus, what else they are proposing to change?

Jewsh | October 16, 2013

@ Thomas N:
"Plus the "Eh" thingy....."

As a Canadian I can confirm that everything from business cards to long distance carrier costs are increased in Canada simply due to this well-known suffix.

It's true. Look it up, eh.

Andrzej1 | October 16, 2013

@Shop

This is supposedly a new issue which was highlighted in today's Throne Speech. From o.canada.com

“On consumer issues:

The government says it will:

–Reduce cellphone roaming costs; force cable networks to unbundle channels to give consumers more choice; continue to expand high-speed broadband;

–Protect consumers from paying more to receive paper bills instead of electronic ones, and from paying more for basic banking services;

–End geographic discrimination against Canadians, a reference to paying more for goods in Canada than in the United States.

–Ensure Canadians will soon be able to take alcohol across provincial boundaries for personal use.”

The third point is interesting as it relates to cars. The easy way to do this would be to get rid of the RIV and give national treatment to all registered US vehicles which was the intent of the free trade deal. In fact national treatment is only in place for those vehicles older then 15 years which exposes the fraud that RIV really is. Supposedly it is there to protect Canadian safety yet those cars where safety is most likely to be an issue, cars over 15 year of age, are exempt from the CMVSS(Canadian Motor Vehicle Safety Standards).

bronto | October 16, 2013

Just a comment which has been brought up somewhere before I think: if it's ok to charge more for incremental transport charge (ie it's a long way to Canada and costs more to ship a car there), then why don't I pay less when I pick up the car at the factory (where the transport cost is $0 for Tesla)???

Andrzej1 | October 16, 2013

Kaboom wrote “Other luxury car brands are also offering reasonable comparable prices to the US equivalent right now.”

No, they're not. See here, http://www.cbc.ca/news/canada/ottawa/canadians-pay-more-than-americans-f... . Moreover the MSRP prices do not tell the whole story as Canadian delivery prices are nearly double in most cases and US Dealer Manufacturers incentives are greater then in Canada.

For those of you who think that this is the way it should be you should realize that for many years over a decade ago Canada had the cheapest car prices on the Continent and a whole industry developed to export Canadian market cars to the US. When the car manufacturers objected to this practice and started to void warranties they were sued by some of the affected US owners and the car companies lost.

To really kill the export business the manufactures jacked up car prices in Canada to such an extent that car exporters became car importers instead. Once again the car manufacturers began playing games to thwart this import business by employing a number of dirty tricks such as voiding warranties or threatening US Dealers who sold to Canadians with various punitive measures. See here, http://www.ucanimport.com/Warranty_Policies.aspx

Just like in the US, Canadian consumers have started suing car manufactures and have had some victories as the German manufacturers have made car importation from the US somewhat easier. This has led MB to reducing the price of the new S550 by some $13K in Canada but only $2K in the US.

While the price disparity has declined somewhat it is not at parity. This is reflected in the RIV numbers which are down from a peak of 240,000 imported vehicles in 2008. Still a good number of people found it economically advantageous to import some 114,000 vehicles into Canada in 2012.

portia | October 16, 2013

it's amazing some people just keep saying the same thing without checking the facts or read previous posts which provided them! No, you are not being screwed by Tesla, stop spreading rumors and half-truths.

+10 BrianH, Andrzej1 , shop
and repost what shop said
Here is an old thread with an explanation from GeorgeB.

http://www.teslamotors.com/forum/forums/canadian-pricing-out-i-am-tears

drp | October 16, 2013

Soon the batteries will be made by tesla in California I expect. Elon mentioned that it is hard to get enough batteries. That will change the formula for % made in North America

Kaboom | October 17, 2013

@andre
I was shopping around and i was considering a Benz CLA only 2 months ago. Looked at the US and Cdn websites exact model and features i wanted. The car cost came to almost identical when you take currency difference into account.

Others are close to.

Yes there is a slight premium to canada in for most car companies, but its not nearly as crazy as it was right around the time we achieved parity few years ago.

Objective1 | October 17, 2013

@drp: There is little chance Tesla Motors will build a new battery manufacturing line in the US any time soon. Apparently, Tesla is negotiating with Samsung for additional batteries to supplement their supply from Panasonic, but those Samsung batteries won't be made in the US either.

It would be hard for a US start-up to match Samsung and Panasonic for current format batteries, as those companies' current factories are highly optimized and they have huge amounts of specific human capital (know how) that no start-up can match. That's why battery start-ups in the US have all failed (A123 anyone?).

DTsea | October 17, 2013

@bronto, in the US that is the 'destination charge' and by law is uniform by geographical area... so picking up at the factory, I believe they are not able to waive it.

AmpedRealtor | October 17, 2013

The cost of doing business must be more expensive in Canada. I have several Canadian friends who tell me that they pay taxes up the hooha and that the cost of doing business in Canada is much, much higher than in the US. Apple came under fire a couple of years ago as well, and offered a similar explanation that any additional cost over the US price is specifically because of duty/taxes and cost of distribution to those countries.

If the price of Model S is too high in Canada, I think the best approach is to address the issue with the Canadian government. My Canadian friends complain about prices for everything, saying that things we buy here for so little money cost so much in Canada. It's not just a Tesla thing.

AmpedRealtor | October 17, 2013

Forgot to add... I had a couple of Canadians visiting here last week. One of them forced me to take her to JC Penney because she said Levi's cost an arm and a leg in Canada. She loaded up on Levi's for her husband and is hoping she doesn't get caught in customs. In a funny way, this reminded me of the cold war when Russians would travel to Eastern Europe to buy toilet paper...

Andrzej1 | October 17, 2013

@Kaboom

I was intrigued by your comment and so I took the opportunity to call a Canadian MB dealer in Toronto on Dundas Street. The salesperson was able to provide me the missing delivery charge for Canada which is conveniently omitted from the Canadian website. Once he provided me this information it was clear why it was omitted given that it is over twice the US charge.

So for your MB CLA250 the comparative pricing is:

US $29,900 + $925 delivery = $30,825 or $31,888 CAD at today's exchange rate of 1.0345

CAN $33,900 + $2075 delivery!!!!!! = $35,975 CAD or $13% more then in the US

He was at a total loss as to explain the difference in delivery charge. When I asked about European delivery for Canadian cars he said in the end it would cost more to take delivery in Germany and have the car delivered to Canada then buying it in Canada directly. He agreed that I would be better off buying the car in the US if I was interested in European delivery as MB offers an additional discount of 7% to the above US price along with other perks to US buyers taking European delivery.

We then had a interesting discussion on the pricing disparity between Canada and the US. He agreed that the fair thing would be to have pricing parity between Canada and the US, and surprise, surprise, he stated that it was the office scuttlebutt that MB was moving to have parity pricing between US and Canada! If true it would be about high time!

Andrzej1 | October 17, 2013

@AmpedRealtor

No, costs for some are lower because they don't have to worry about basic health care costs. It boils down to the greed of some US corporations and a complicit Canadian government erecting various non-tariff barriers for Canadian consumers seeking relief on this price gouging by sourcing product through US distribution. See here, http://www.cbc.ca/marketplace/episodes/2012-2013/price-tag-confidential and here, http://www.theglobeandmail.com/globe-investor/investor-community/price-d...

The Canadian Government stated in the Throne Speech yesterday that it would end this price discrimination.

US consumers have been victims of these unscrupulous practices in the past as well. Toyota had to pay a $35 million dollar fine for trying to keep cheaper Canadian market cars out of the US in the past. See here, http://consumerist.com/2011/01/26/canadian-export-antitrust-class-action/

jbunn | October 17, 2013

I would agree with Andrzej1. For 20 years, I lived close enough to the Canadian border to drive there and back for a day trip. Used to navigate on my boat enough to get a customs rapid entry number. As a frequent (and grateful) visitor to our good friend to the north, I can say the Canadians are NOT an unhappy, impoverished, oppressed, or poor people.

Oh, Canada! I wish you were a little further south....

Andrzej1 | October 17, 2013

@jbunn

Wait a few weeks and you may just get your wish as hundreds of thousands of Canadian Snowbirds begin their annual migration south and take over parts of Florida and other southern climes.

Christianjacques | October 18, 2013

as some say people don't read , here a link with the canadian governement. THERE IS NO 6.1% duty on cars build in the USA. If you purchase a MB in the state you have to pay the duties because the car have been build in GERMANY

here the link, READ IT

http://www.cbsa-asfc.gc.ca/publications/pub/bsf5048-eng.pdf

Brian H | October 18, 2013

I did, maroon.
"You will also have to pay any customs duty and other import assessments, including taxes that may apply.

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