Europe Axes EV Perks, Tesla Faces Downward Shift

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Germany Throws Wrench in EV Incentives:

Germany’s abrupt cancellation of its “environmental bonus” subsidy program throws a curveball at electric vehicle (EV) makers, including Tesla, Volkswagen, BMW, and Stellantis. The program, originally scheduled to end on December 31st, is cut two weeks short, effectively shutting down last-minute buying surges fueled by the 4,500-euro ($4,909) subsidy. This move further hinders Tesla, especially after France’s recent decision to prioritize subsidies for European-made EVs, excluding Tesla’s Chinese-built Model 3.

Tesla Navigates Subsidy Crossroads:

Tesla’s Berlin factory faces temporary closure from December 22nd to January 2nd, adding to concerns about underutilized capacity. The company’s Model 3 sales in France likely peaked in November and December before the new subsidy restrictions took effect. In the US, Tesla’s Model 3 loses a significant portion of its tax credits under the Inflation Reduction Act due to battery sourcing limitations.

Demand Forecasts Plummet:

Analysts predict a substantial decline in Tesla’s demand in European and US markets due to the expiring or restricted subsidies and tax credits. Without substantial price cuts or other incentives, Tesla faces a challenging landscape in major regions. While Tesla stock rose last week, analysts remain cautious about its long-term performance under these tightened subsidy frameworks.

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