Germany is forcing more than 1,000 Tesla owners to cough up government subsidies because the value of their cars exceeded the country’s threshold for propping up the electric vehicle market.
Germany’s Federal Office for Economic Affairs and Export Control said 1,050 Model S owners will have to forgo a $2,337 subsidy. Tesla delivered vehicles costing more than $69,000, prompting the government to remove the company from the subsidy list on Nov. 30, 2017.
“The subsidy needs to be repaid by 800 people who had received it, and another 250 customers who had been notified they were eligible… will now not receive it,” a spokeswoman with the German government told reporters Wednesday. People who purchase base vehicles that cost less than $69,000 are still eligible for the subsidy.
Tesla is running up against a similar situation in the U.S. Tax credits for Tesla’s major vehicles will now be reduced 50 percent every six months until it is completely phased out. The change gives rivals such as Mercedes-Benz, BMW AG and Audi AG the upper hand, as they bring electric models to the market with a full tax credit in place.
The $7,500 tax credit will drop starting Jan 1, 2019, to $3,750 around mid-year, according to Tesla’s website. GM is entering a similar stage — it is expected to hit the 200,000 vehicle point with sales of its Chevrolet Bolt EV, among other vehicles. There is no guarantee that Tesla can thrive in the automotive industry without tax credits.
Data shows the elimination of the tax credit could be a possible death knell for Tesla, especially considering the company’s inability to mass produce vehicles at the scale of its larger competitors. (RELATED: Government Tax Credits Are Running Out For Musk As Tesla Hits The 200K Vehicle Mark)
A data analysis conducted by The Wall Street Journal in July 2017 shows there were no new Tesla Model S sedans and Model X SUVs registered in Hong Kong the month after that country revoked the tax credit. There were 2,939 Tesla vehicles registered in March of that year before the April 1 redaction of the credit, and nearly 3,700 entering the department’s books for the first quarter of 2017.
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