Tesla move will draw further companies into Germany

Tesla's (TSLA.O) announcement earlier this month that it will build its first European factory near Berlin will draw further companies from the electric mobility and energy storage sectors into Germany, a state premier told newspaper Die Welt.

"They are already on their way. I'm hearing there are further inquiries with the communities and the regional business development program. Tesla will cause other companies to follow," said Dietmar Woidke, premier of the eastern German state of Brandenburg that surrounds Berlin.

He said Brandenburg was already in talks with other companies, declining to identify them due to confidentiality agreements. "I expect that we can announce it before Christmas," Woidke said.

Tesla's move is a big boost for Germany as a center for manufacturing after BMW (BMWG.DE) and Daimler (DAIGn.DE) in recent years chose to build new factories in Hungary, and after its auto industry was hit hard by Volkswagen's (VOWG_p.DE) admission in 2015 that it cheated U.S. diesel emissions tests.

Meanwhile, Tesla sent out a warning email this week that the federal tax credit for buying an electric vehicle will expire for good for Tesla EVs in less than five weeks.

That the tax credits will expire soon is no surprise, since the way the credits were structured when they were introduced in 2010 laid all of the rules out clearly. The first 200,000 buyers of plug-in vehicles - pure EVs and plug-in hybrids - from any automaker get to take advantage of tax credits that range between $2,500 and $7,500, depending on the size of the battery pack in the car they buy. After the first 200,000 are sold, tax incentives for EVs from that automaker start to decline in what's called the "phase out" period.

The Environmental Protection Agency tracks (to some degree) the progress the automakers are making on selling EVs. The exact sales figures are not listed, but the current value of the credits for each OEM are available. Only Tesla and GM have sold enough plug-in vehicles for the credits to start phasing out. For Tesla, the phase out started on January 1, 2019.

That's when the $ 7,500 credit was cut in half to $ 3,750, and it stayed there until June 30. For the second half of 2019, the tax credits for Tesla EVs were just $ 1,875. And this is the amount that goes away entirely at the end of December, so any Tesla that gets ordered this year but delivered in 2020 will not qualify.

GM EV's are still in the $1,875 zone, and they will remain there until the end of March 2020.