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Tesla claims it was excluded from German incentives on purpose

Germany’s recently unveiled EV incentive programme may be popular with German automakers, but the decision has not been welcomed by EV giant Tesla.

At the end of April, Germany unveiled a €1.2 billion incentive and investment programme to boost the adoption of electric cars in the country. However, the plan, which includes a rebate of up to €4,000 on the purchase of a fully-electric vehicle (and up to 3,000 euros on a hybrid) has not been welcomed by Tesla, which claimed that it has been excluded from the scheme on purpose.

The German-government-promoted EV scheme – also backed by with German automotive giants Volkswagen, Daimler and BMW – extends the incentives to vehicles costing €60,000 or less: an amount far below the average retail price for Tesla’s current models (the Tesla Model S starts at €94,540, including VAT, in Germany).

On its German website, Tesla commented that “part of the programme is obviously directed against” them. The response continued:

“Unfortunately, it was decided that Model S and Model X customers wouldn’t benefit from this promotion, because what they call ‘premium’ is linked to an arbitrary price limit”

There is no indication that Tesla was directly targeted by the base price limit other than this cap, but given the support for the legislation by German firms, it may have the right to feel aggrieved. German carmakers are expected to contribute €600 million or about half of the budget of the investment programme, launched at the beginning of May. Indeed, this may be a partial explanation why German manufacturers may be unwilling to help pay for Tesla’s vehicles in the country.

Furthermore, it is fair to say that the approval of similar incentive plans in the past has often raised concerns that governments are subsidizing luxury vehicles for the benefit of wealthier people, rather than promoting more affordable, mass-market cars.

 

Mass production

While its existing models may not benefit from the German incentive scheme, Tesla does not seem discouraged from ramping up its production estimates. CEO Elon Musk raised the stakes, announcing in a May 5 conference call to investors that the company plans to build 200,000 Model 3 cars by the end of 2017.

However, many believe that Musk is attempting to push the company too far, too fast and that its mission to produce EVs better, faster and cheaper than anyone has done before clashes with reality. Tesla has yet to deliver a vehicle on time – production of the Model X, for example, was slowed down for almost eight months by a shortage of some important parts – and the ramp-up in production needed to reach the 200,000-unit goal is substantial.

Nevertheless, Musk told his audience that he is confident the Model X’s problems will not be repeated with the Model 3, as the latest offering is designed with ease of manufacture in mind, adding that: “We’re not adding extraneous features to the 3 that aren’t necessary to achieve the production volume.”

About Giulia Maccagli

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