Welcome to the New Year: what will change for Tesla and the rest of the electric car industry
If you just look at the share price of trailblazer Tesla, 2022 has been a terrible year for the electric vehicle industry — and in fact other manufacturers also had to lose a lot of feathers on the stock exchange. On the other hand, it means more room for improvement in the new year. In any case, the conditions for the production and sale of electric vehicles in general in 2023 will certainly not worsen. Subsidies are being discontinued or reduced in some places, but the industry could get a big boost, especially in and out of the US.
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The US is also funding imported electric vehicles
As Tesla's home country goes into effect in the new year, the Inflation Reduction Act (current), a hundreds of billions of dollars worth of climate and economic stimulus package with the unmistakable goal of making the country a belated global electric vehicle powerhouse. Until now, China has unquestioningly played this role at almost all stages of the value chain, which is perceived as increasingly sensitive from a geopolitical perspective. Thus, the United States is promoting the production of batteries and electric vehicles in their country with significant financial investments.
As shown in the last days of the old year, the industry is also given a grace period on the prescribed proportion of North American battery material. Essentially, this means that Tesla buyers, for example, will receive a $7,500 tax credit, regardless until the rules are released in March. But Tesla isn't the only one benefiting from the fact that the complex rules are still pending: according to Reuters, the US Treasury Department has said that electric vehicle leases are considered commercial and are therefore initially supported regardless of where they are made.
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This de facto opening of subsidies for imported electric vehicles may be related to protests against the openly protectionist IRA from Europe. In fact, the EU Commission praised the leasing decision, but also said it was aiming for greater equity in the US' own electric vehicle industry. Chinese politicians or manufacturers did not initially comment on this. But even for electric cars from there, opening through leasing should mean a funding loophole.
Tesla prices could fall in 2023
However, manufacturers of the largest and most developed market for electric vehicles in the world are initially drawn not to the United States, but to Europe. For example, with BYD, Nio and Ora, several interesting brands have already launched in Germany in 2022, with new and additional models to be added in 2023. This may finally make modern electric vehicles more affordable — and in high demand in Germany, where the environmental premium from the state has been reduced from 6,000 euros to just 4,500 euros. It's also possible that the Model 3 and Model Y will also cost less in the new year because Tesla has been offering to offset a cut in the electric car subsidy for them since December. In Norway, the country with the highest proportion of electric vehicles in the world, a significant subsidy will be eliminated, but only partially: the 25 percent VAT will no longer be completely eliminated, but only on a part of the purchase price. below the equivalent of almost 49,000 euros. In addition, a weight tax will also apply to electric vehicles from 2023. Both should also play into the hands of Chinese manufacturers with their relatively cheap and light cars.
In their home country, they recently received an additional 5 percent sales tax exemption extension that was due to end in 2022, the SCMP reported just before the end of the year. This applies to electric vehicles such as plug-in hybrids that cost no more than 40,500 euros, and thus the smallest Tesla Model Y, which was priced below that threshold in October.
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New Model 3 possible towards the end of the year
Despite last year's nasty stock market developments, the course for a more global EV growth in 2023 appears to have been set political forces. From an economic perspective, it will be necessary to show the extent to which economic uncertainty and rising interest rates are putting pressure on consumers' willingness to buy. By the end of 2022, Tesla in particular had to contend with declining popularity ratings in the US and Europe, likely due to CEO Elon Musk's antics on Twitter. However, he could argue with a revision of the Tesla Model 3, which was announced in November: it should be produced from the third quarter of 2023 and at a significantly reduced cost, which should also allow prices to decrease.