Electric vehicle subsidies are ending in Germany abruptly, the government announced Saturday, a blow for Tesla (TSLA), Volkswagen (VWAGY), BMW (BMWYY), Stellantis (STLA) and more.

German’s coalition government, facing a budget crisis, is ending the “environmental bonus” program as of Sunday, not Dec. 31 as planned. But a vehicle has to be registered before a buyer can take delivery, so the EV subsidy is effectively over.

Germany’s EV subsidy has been up to 4,500 euros ($4,909). Just a few days earlier, Berlin announced that the EV subsidy would not continue in 2024 at a reduced rate of 3,000 euros ($3,273).

As of Sept. 1, the EV subsidy expired for businesses and limited to private individuals. The business tax expiration spurred a big rush to buy EVs as well.

But with the subsidy program ending two weeks early, that cuts off a last-minute buying binge. Just on Dec. 12, Tesla offered German buyers 0.99% loans for those who ordered by Dec. 18 and took delivery by Dec. 31. Many of those ordering under that promotion won’t get the 4,500-euro subsidy now.

Tesla’s Berlina-area plant reportedly will shut production after Dec. 22 and not reopen until Jan. 2, 2024. The plant, like Tesla Shanghai, is running well below capacity.

Tesla Model 3 Subsidies Lost In France

Germany’s move comes amid tighter restrictions on EV subsidies in France.

As of Dec. 15, France effectively limited EV subsidies of up to 7,000 euros ($7,636) to electric cars made in Europe. Chinese-made vehicles, including the Tesla Model 3, are no longer eligible. The Model Y will still be eligible because Tesla makes the crossover at its Berlin-area plant.

French Model 3 sales surged in November, and presumably were strong in the first half of December, but should now fall off. That will be impact Tesla Shanghai.

Germany and France are Tesla’s two largest markets within Europe.

IRA Credits Scaled Back

Meanwhile, the base Rear Wheel Drive and Long Range Model 3 variants, will lose $7,500 tax credits under the Inflation Reduction Act as of Jan. 1 due to tougher restrictions on battery sourcing. Until a week ago, the expectation was that those Model 3 vehicles would lose half their credits.

The base RWD Model 3 uses LFP batteries from China’s CATL. The LR Model 3 uses traditional 2170 lithium-ion batteries from South Korea, but some materials and components hail from China.

Tesla presumably will try to source batteries to regain those credits, but there’s no quick fix. The Tesla-Panasonic plant outside Reno is production limited. Tesla’s 4680 battery cell production is ramping up from a low base.

The expiring or restricted EV subsidies and credits have acted as a pull-forward demand incentive for Tesla in these markets. Demand will likely weaken substantially next year in these countries barring significant further price cuts or discounts.

Tesla Stock

Tesla stock rose 4% to 253.50 last week in strong volume, clearing two early entries. TSLA has an official 278.98 buy point from a five-month double-bottom base.

Extracted in full from:  https://www.investors.com/news/electric-vehicle-subsidies-germany-ends-ev-bonus-abruptly-in-latest-blow-to-tesla/

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