Electric car subsidies: Germany abruptly ends electric car subsidies in the latest blow to Tesla
The German government announced on Saturday that support for electric cars will end suddenly, which constitutes a blow to Germany Tesla (Tesla), Volkswagen (My regiments), BMW (BMWY), excellent (STLA) and more.
Germany’s coalition government, facing a budget crisis, decided to end the “eco-bonus” program as of Sunday, and not on December 31 as planned. But the car must be registered before the buyer can take delivery, so support for EVs is effectively over.
Subsidies for electric cars in Germany reach 4,500 euros ($4,909). Just a few days ago, Berlin announced that subsidies for electric cars would no longer continue in 2024 at a reduced rate of 3,000 euros ($3,273).
As of September 1, subsidies for electric vehicles for businesses have ended and are limited to individuals. The expiration of the business tax has led to a huge rush to buy electric vehicles as well.
But with the support program ending two weeks early, it reduces the urge to buy last minute. On December 12 alone, Tesla offered German buyers 0.99% credit to those who ordered by December 18 and received by December 31. Many of those who order under this promotion will not receive the €4,500 support now.
Tesla’s factory in the Berlin area will reportedly shut down production after December 22 and will not reopen until January 2, 2024. The factory, like Tesla Shanghai, is operating well below capacity.
Tesla Model 3 lost support in France
Germany’s move comes amid tougher restrictions on electric car subsidies in France.
As of December 15, France effectively restricted electric vehicle subsidies to up to 7,000 euros ($7,636) for electric vehicles made in Europe. Chinese-made cars, including the Tesla Model 3, are no longer eligible. The Model Y will still be eligible because Tesla is rolling out the crossover at its Berlin-area factory.
Sales of the French Model 3 rose in November, and were supposed to be strong in the first half of December, but should now be declining. That will be the Tesla Shanghai effect.
Germany and France are Tesla’s two largest markets within Europe.
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Meanwhile, base rear-wheel-drive and Long Range Model 3 models will lose $7,500 in FRA tax credits starting Jan. 1 due to stricter limits on battery sources. Even a week ago, Model 3 vehicles were expected to lose half their credit.
The base RWD 3 model uses LFP batteries from Chinese company CATL. The LR Model 3 uses conventional 2170 lithium-ion batteries from South Korea, but some materials and components come from China.
Tesla is supposed to try to provide batteries to regain these credits, but there is no quick solution. The Tesla-Panasonic plant outside Renault has limited production. Production of Tesla’s 4,680 battery cells is increasing from a low base.
Expiring or restricted electric vehicle subsidies and credits have been a catalyst for demand for Tesla in these markets. Demand is likely to weaken significantly next year in these countries, unless there are further reductions or significant reductions in prices.
Tesla stock rose 4% to 253.50 last week on strong volume, clearing two early entries. TSLA has an official buy point of 278.98 points from a five-month double bottom base.
Please follow Ed Carson on X/Twitter at @IBD_ECarsonthreads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
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