Tesla Inc. Is at War with the German Government as It Loses EV Incentive Right

Tesla Model S 1 photo
Photo: Tesla Inc.
Tesla's history in the German market is almost as rocky as that in the State of Michigan - isn't it funny how these coincide with the two places where most of the world's automotive industry is concentrated?
Yeah, well let's not go down the conspiracy theory (as obvious as it may be) and focus on the facts. A few years ago, the German government decided to offer a substantial incentive for any buyer that chooses an electric vehicle. The same thing happened in other countries as well with just the quantum of the rebate differing.

Or so you'd think. For some reason, the Bundestag reckoned it should establish a maximum vehicle value up to which the incentive would apply. After talking with local manufacturers, they settled on a €60,000 limit. Naturally, none of Tesla's models fitted the bill, so the American carmaker had to be inventive.

Eventually, Tesla found a loophole around it by unbundling a series of features that came standard in all other markets. Basic things such as reverse camera, navigation, folding mirrors and the like were included in a "comfort package" that would bring the vehicle's price back to its initial level. However, should anyone want to buy a Model S without these functions for under €60,000, they could very much do so.

Even though Tesla was the only manufacturer affected by the decision, it's not impossible that the Germans simply wanted to make sure they weren't incentivizing a luxury product. After all, it's not exactly sensible to use public funds to spare wealthy people of having to pay €4,000 on an already expensive vehicle. On the other hand, that's capitalism for you. If you don't like it, you can either work harder or move to North Korea.

Well, even though Tesla worked this scheme for over a year, the German government decided now to exclude its vehicles from the list of those eligible for the incentive. German publication Auto Bild went one step further and had "The Tesla Scandal" as its main cover title, also using words such as "cheat," "deception" or "fraud" to describe its actions. Which wouldn't be such a great deal had it used them as well to talk about Volkswagen's diesel emissions situation back in 2015.

Tesla is definitely going to have a hard time making it on the turf of Audi, BMW, Mercedes-Benz and Volkswagen, but the simple fact it's not backing off in the face of this adversity is commendable. It'll definitely be interesting to see what happens once the Model 3 kicks in, though we might have to wait a little for that.

In the meantime, here is Tesla's stance on the situation:
This is a completely false accusation. Anyone in Germany can order a Tesla Model S base version without comfort package, and we have delivered such cars to customers. It’s important to note that the incentive price was intentionally set by the German Government at a level that was specifically intended to prevent Tesla cars from qualifying for it. As a result, Tesla planned to make an appeal to the EU trade commission, as this was against EU rules. Instead, Tesla and the German Government agreed on an acceptable middle ground that allows Tesla to sell a low option vehicle that qualifies for the incentive and customers can subsequently upgrade if they wish. That is exactly what Tesla has done.

Every Tesla customer can order their car online and select whatever options they like. It is clear from that ordering page that a Model S can be ordered without the comfort package. If a sales person told a customer they could not buy the Model S base version without the comfort package, this is not accurate and clearly outside our policies and procedures and we will investigate and take appropriate action as necessary.”
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About the author: Vlad Mitrache
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"Boy meets car, boy loves car, boy gets journalism degree and starts job writing and editing at a car magazine" - 5/5. (Vlad Mitrache if he was a movie)
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