The German government’s subsidies for electric vehicles are expected to be reduced next year, which will be bad news for Tesla customers. However, Tesla has promised to compensate certain customers to make up for the shortfall from reduced government subsidies.
Demand for the Model 3 and Model Y in Germany is so strong that some orders may not be filled until 2023. So even if they order a car today, some customers may end up not receiving their car until 2023, when the German government’s EV subsidy policy will be adjusted.
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However, Tesla has come up with a solution to this. The company’s Model Y preorders in Germany have been notified: Model Y customers who cannot pick up their cars before the end of the year will still receive the German government’s current subsidies for electric vehicles, but Tesla will pay for the difference directly.
Tesla said in the notice that the company will be responsible for making up the difference between Germany’s current subsidies and next year’s adjusted subsidies, a policy that is effective for orders through December 31, 2022.
Germany is one of the most important car markets in Europe, and it is difficult for other automakers to break into this market because Germany has many powerful local car companies such as Volkswagen, BMW, and Mercedes-Benz. Tesla has done a lot in Germany early on, but it is now expected to run its factories better locally.
Last year, Tesla delivered nearly 40,000 cars in Germany. But on its third-quarter earnings call, Tesla announced that it aimed to increase sales to 80,000 in 2022. Considering that Tesla has delivered fewer than 35,000 vehicles as of September and already has the best-selling vehicle in Germany, it still has a long way to go.
However, one factor that may help Tesla’s goal of breaking the fourth-quarter delivery record in Germany is that starting next year, Germany will significantly reduce subsidies for electric vehicles with a starting price of fewer than 40,000 euros. From 6,000 euros to 4,500 euros, the subsidy for electric vehicles with a starting price of more than 40,000 euros has been reduced from 5,000 euros to 3,000 euros.
Typically, the eve of lowering or eliminating EV subsidies prompts more people to buy vehicles, which is part of the reason Tesla believes it can deliver more than 40,000 vehicles in Germany in the fourth quarter.
Tesla’s recent performance in Germany has been impressive. Just recently, the company introduced two new paints for the Model Y built at its Berlin plant, dubbed Quicksilver and Midnight Cherry Red, effectively replacing Multi-Layer Red.
It is reported that demand for the new color Model Y appears to be strong, and the wait time for the midnight cherry red version of the Model Y has been pushed back to July 2023 at the earliest. Recent photos of the Berlin factory complex also show that the facility’s battery production building appears to be nearing completion.
