An Ontario judge has zapped the Progressive Conservatives’ plan to immediately end rebates for buyers of Tesla electric vehicles.

In a legal setback Monday for Premier Doug Ford’s fledgling government, Superior Court Justice Frederick Myers ruled that Tesla Motors Canada was not treated fairly when the Tories scrapped the subsidies last month.

“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,” Myers wrote in a scathing 17-page ruling.

“He has yet to do so. I therefore quash and set aside the Minister’s unlawful exercises of discretion to implement the transition program announced July 11,” he continued.

A spokesperson for Attorney General Caroline Mulroney told the Star late Monday that the Ford government is “reviewing the ruling and will make a decision on how to proceed in the coming days.”

Some 600 Ontario Tesla customers were affected by the Tories’ policy change. It was not immediately clear if they would now receive the rebates.

Myers ruled that the province must pay Tesla $125,000 for the company’s legal costs.

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Tesla, whose customers have been receiving government rebates of up to $14,000 for their cars and SUVs, expressed satisfaction with the ruling.

“We’re pleased with the court’s decision to strike down the ministry’s transition plan as unfair and unlawful,” a Tesla spokesperson said Monday night.

“Tesla only sought fair treatment for our customers and we hope the ministry now does the right thing by delivering on its promise to ensure all EV owners receive their incentives during the wind-down period.”

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Tesla was immediately impacted by the Tories’ winding down of electric vehicle subsidies because — unlike General Motors, Volkswagen, Toyota and other firms — it sells cars directly to customers.

Last month, the government said the rebate program was being scrapped but incentives would continue to be honoured for vehicles bought from a dealership as long as they are delivered and registered by Sept. 10.

Because Tesla does not sell via dealerships, its cars and SUVs were ineligible for the incentives.

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Monday’s decision is the first of many anticipated legal proceedings related to Ford’s cancellation of Ontario’s cap-and-trade agreement with Quebec and California.

That climate-change plan brought in $1.9 billion to provincial coffers, all of which went toward environmental initiatives like subsidizing electric cars, which pollute far less than gasoline-powered vehicles.

But Ford, who derided cap-and-trade as a “carbon tax,” ended the program in favour of reducing gas prices by 10 cents a litre.

Ontario Superior Court ruling View document on Scribd

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

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