The Austin company has a bold plan by which it hopes to become a sales leader in 2022. But reality is that whatever advantage the government might give you, it can also take away on the spot. In Germany the government is very clear that it wants to greatly reduce the carbon footprint of its vehicle fleet, although its actual policies seem to somehow conflict with that idea: next year the Germans will see aid for the purchase of low-emission cars actually reduced, which in turn could seriously harm manufacturers. However, Tesla sees it as a possibility to close a record year of sales in the European country; its plan basically involves ensuring aid that is not guaranteed, so to say.
During the past month of July, a very important piece of news was reported regarding the future of the German electricity market. The Government is going to reduce aid for the purchase of electric cars: the new economic program reduces the aid for the purchase of an EV whose sale price is less than 40,000 euros from 6,000 to 4,500 euros; and will also reduce the deductions for the purchase of an electric vehicle whose sale price to the public exceeds in 5,000 to 3,000 euros the 40,000 euros threshold. The case of plug-in hybrids is even more complicated, since any possible public subsidy is directly eliminated.
This announcement is a severe setback for the plans of some companies for the next year, 2023. Let´s take into account that Germany is one of the most important automobile markets in Europe, if not the most. Within its borders we find important legacy brands such as BMW, Audi, Volkswagen or Mercedes Benz, among many others. It is also the location chosen by many new manufacturers such as NIO or Xpeng from China, due to a significant market penetration; just as there are numerous factories spread throughout the country, such as the Gigafactory Berlin that Tesla has in Brandenburg, Grunheide.
Tesla has been heavily betting on Germany for a long time, but the new aid packages will not benefit the Austin company for next year; even though they can be an important attraction in order to close this year with record figures again. During the last quarterly report, Tesla stated that its sales target for Germany is to reach the 80,000 units sold, more than double what was achieved in the previous year. Although sales are actually going very well, this objective assumes that more than 40,000 units – approximately - should be delivered in the last quarter of 2022. The question is: how do they intend to do it?
In addition to the usual “closing push” at the end of the year - typical of Tesla - the directors of the German division have basically established a risky plan: with the intention of attracting potential buyers, Tesla Germany promises to cover the lost aid if the car is not delivered before the end of this year. That is to say: for a client to be able to access the aid package for 2022, the car must be registered in 2022. If it is registered in 2023, it will receive less aid. Therefore, if any customer requests a Tesla now and it does not arrive before the end of the year, the company will cover the proportional part of the lost aid package.
It is clear for everybody that the proposal is, to say the least, very aggressive and daring. Keep in mind that Tesla does not offer anything below 40,000 euros, so at this time its customers benefit from 5,000 euros of help, which will be 3,000 starting next year. Tesla has made its calculations and believes that it is worth covering those 2,000 euros for cars that cannot be delivered before December 31st 2022. It is expected that they will not be many, although the objective they seek is not so easy to achieve.
All images courtesy of Tesla Inc.
Nico Caballero is the VP of Finance of Cogency Power, specializing in solar energy. He also holds a Diploma in Electric Cars from Delft University of Technology in the Netherlands, and enjoys doing research about Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers Tesla and electric vehicle latest happenings at Torque News.