Tesla CEO Elon Musk is about to be bitterly disappointed - as are hundreds of his customers.
As Musk struggles to convince buyers to be patient as production finally ramps up at Tesla's Fremont Factory (albeit with one or two minor snags), German newspaper Handlesblatt published a story that might herald a sharp drop in Tesla's government-backed European sales.
Thanks to a disagreement between Tesla and a German regulator, more than 800 German customers who purchased the Tesla Model S will need to repay the government-backed purchase subsidy that European regulators have insisted upon - for fully electric vehicles, that amount equals roughly $5,000.
According to regulations, the bonus is only supposed to apply to cars with a maximum net price of 60,000 euros (about $70,000). Tesla had initially said it would issue its cars without a "comfort package" to stay below the price limit but a German regulator took it off a list of eligible cars anyway, saying the subsidy only applies to the price of the car's "basic" version. Since then, regulators have been in contact with the company to try to work out a solution, but now that the Germans' deadline of July 1 has passed, the subsidy "reversals" must be paid.
Affected buyers who purchased a Tesla S before March 6 will be contacted by regulators. Interestingly, buyers who bought the cars after the deadline for the program can still apply for the subsidy by submitting additional information including details on the program.
Given the price tag for a Tesla, this incentive money has been a major deciding factor for buyers of electric vehicles, including Teslas.
The European Automobile Manufacturers Association (ACEA) provided an inadvertent demonstration of the power of these subsidies last year when it published sales figures for Electrically Chargeable Vehicles (which include plug-in hybrids). During the first quarter of the year, sales were brisk, rising 80% Y/Y in eco-friendly Sweden, 78% in Germany, just over 40% in Belgium roughly 30% across the European Union... but not in Denmark: In Denmark, sales cratered by over 60% for one simple reason: the government phased out taxpayer subsidies.
And with President Trump's trade war threatening to make US products more expensive abroad, Tesla has already raised prices in China, where it says it plans to build a factory to ensure its access to the world's biggest "growth market."
Though Musk has apparently succeeded in one thing: Battery innovation that has allowed Tesla to stretch expensive rare earth metals like cobalt even further. An analysis by a German lab recently concluded that Tesla's batteries were only 2.8% cobalt, which is apparently better than many of its German competitors.
Still, we wonder: Will a drop in German sales (not to mention the slate of electric vehicles being introduced by German automakers, which is certainly curious given the government's decision) herald a retreat for Tesla in Europe? Elon Musk, who is still reeling from his Thai pedophile tweet scandal after barely reaching his production goal for the month of June, should hope not.