LFP-Powered Tesla Model Y RWD Emerges In Canada

It opens the door for incentives for the entire Model Y-family being under the price cap.

By: Mark Kane

Apr 21, 2023 at 3:31pm ET

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An all-new rear-wheel-drive version of the Tesla Model Y has just emerged in Canada, which potentially might bring a breakthrough also for the United States.

The new rear-wheel drive Tesla Model Y RWD is not only a Model Y without the front motor. According to Drive Tesla Canada, it's equipped with Lithium Iron Phosphate (LFP) battery just like the Tesla Model 3 RWD. In other words, it's a completely different version than the Model Y RWD offered for a short time in 2021.

That's very interesting news because the new entry-level version with less expensive batteries is noticeably more affordable. According to Tesla's website, the car starts at $59,990 CAD, which is $44,311 USD - that's $10,000 CAD or 14 percent less than the Model Y Long Range AWD.

The less energy-dense battery pack will not enable the Model Y RWD to achieve the same range as the LR AWD version, but 245 miles (394 km) "EPA est" does not sound bad. The LR AWD gets 35 percent more range - 330 miles (531 km) and accelerates faster though.

Tesla Model Y RWD (LFP) in Canada:

range (EPA est.): 245 miles (394 km)
top speed: 135 mph (217 km/h)
0-62 mph (100 km/h): 6.9 seconds

Tesla Model Y RWD (LFP) in Canada:

range (EPA est.): 330 miles (531 km)
top speed: 135 mph (217 km/h)
0-62 mph (100 km/h): 5.0 seconds

That's an interesting thing because we know that, in the past, Elon Musk criticized the insufficient range of the entry-level Model Y, which was cited as one of the reasons why this version disappeared.

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Tesla Model Y RWD (LFP) Vs. Incentives

The reason why Tesla has decided to introduce an entry-level version, which is not only RWD, but also LFP-powered, might be pretty simple - Canadian incentives and the intention to increase sales.

The Canadian iZEV rebate of 3,692 ($5,000 CAD) is available for crossover/SUV models that start at up to $60,000 CAD, so the LR AWD version ($69,990 CAD) was not eligible.

However, once a manufacturer offers a trim under the price cap of $60,000 CAD, then the entire model family becomes eligible for the iZEV rebate, up to a higher price cap of $70,000 CAD. This way, the Tesla Model Y RWD is eligible and LR AWD is eligible. The Performance version is too expensive to qualify anyway.

Tesla Model Y RWD in Canada

As we understand, thanks to this move, Tesla might be able to noticeably increase sales of its Long Range AWD version, even if the availability of the RWD version would be limited (we don't know anything about that). The first deliveries of the Tesla Model Y RWD (LFP) in Canada are expected in May-July.

Let's recall that on top of the federal incentive, there are also additional ones: British Columbia ($4,000 CAD) and Quebec ($7,000 CAD).

Other markets

The main question is whether Tesla will soon introduce the LFP-powered Model Y RWD in the United States. Development is already done and customers might be interested, so there is a potential for that. On the other hand, Tesla might be reluctant because the company probably earns more on selling more expensive trims.