Why Tesla is not (yet) very affected by the recession in Germany

Why Tesla is not (yet) very affected by the recession in Germany

Germany is in recession. Although the country is still held captive by the inscrutable debates about speed limits, the end of nuclear power plants and mandatory heat pumps, the economic policies of the green “light direction” Habeck sinks deeper and deeper into the darkness. There are already idle rumors about tax increases. As a result, people’s willingness to buy has dropped even more. Dissatisfaction with the “traffic light policy” has now reached the majority of society.

Pragmatists rare, but win

German and European companies scoffed at Tesla’s price cuts earlier this year. It was thought that the Americans wanted to compensate for the excess production. Indeed, further effects of the strict pricing policy are now being seen. And those are not good for competition and partly not for other users.

Industry insiders fear the upheaval

DAT, Deutsche Automobil Treuhand, closely monitors the German market, including the used car market. Their assessment of Tesla’s pricing policy should be taken very seriously.

Competition remains under pressure

Tesla is now “forced” into price areas that have been the domain of European OEMs and small cars that are poorly equipped with low efficiency and battery capacity. The smallest model of Tesla, after the subsidy, now costs around 36,000 euros in Germany, making it more than Opel, PEUGEOT, VW & Co. they compete. With high efficiency and a flanged charging infrastructure that is unmatched.

On the margins? Which margin?

German and French OEMs currently make little, if any, profit per electric vehicle. As a rule, even incur losses, which compensate for the production of combustion vehicles. So their financial operating room is exhausted – they cannot continue to cut prices with current models. Some try to deal with this with reduced models, but this makes the situation worse.

Tesla over Toyota, Q1 2023

Premium manufacturers are racing ahead

High-end manufacturers such as Mercedes-Benz and BMW, on the other hand, dare to rush ahead and introduce newer models at premium prices. The BMW Five electric car, based on the Munich company’s famous business salon in Germany with a combustion engine, has just celebrated its world premiere. Entry-level prices start at 70,000 euros (in basic equipment) for the “small” version. And the additional list for a car with a length of more than 5 meters is long, as it is used from German manufacturers.

Second hand market in free fall

Hard impact also on the second-hand market. This time even Tesla drivers will have to surrender, because the previous prices of second-hand cars can no longer be obtained due to the reduction in the price of new cars and the large supply. Therefore, the holding time will increase. Competitors’ used cars, however, risk greater losses, as they tend to be less equipped than Teslas, which are always sold fully equipped.

Fortress against China?

And then there is China. Chinese automakers and auto startups are making inroads into European markets and would like to take on the lucrative German market today. Tesla’s strict pricing and delivery policy, DAT expects, has put an end to this for now. Chinese newcomers are also increasingly “going down”.

Everything went well?

In other words, Musk’s company seems to have done everything right. In addition, they have the ability to deliver, something they also have compared to regular OEMs. The result? Since the beginning of the year, Tesla Model Y is not only the most successful electric car in Europe, but it is also set to be the most successful car in the world. Wow!

About this column:

In a weekly column, written alternately by Eveline van Zeeland, Derek Jan Fikkers, Eugène Franken, JP Kroeger, Katleen Gabriels, Bernd Maier-Leppla, Willemijn Brouwer and Colinda de Beer, Innovation Origins tries to find out what the future holds. These columnists, sometimes supplemented by guest bloggers, all work in their own way on solutions to the problems of our time. Here are all the previous episodes.