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Tesla Motors Inc (NASDAQ:TSLA) Slammed With Targeted Tax In Europe

Elon Musk Tesla Motors Inc (TSLA) and SolarCity Corp (SCTY)

Tesla Motors Inc  has faced its fair share of roadblocks in the US, but things in Europe are different. States there care about the environment and support firms that are trying to make a difference. That’s the narrative that has reigned among many Tesla Motors fans for some time, but it’s simply not true.

Elon Musk Tesla Motors Inc earnings

The Netherlands, a country in which Tesla Motors actually builds some cars, has put a new tax in place that targets Elon Musk’s firm. A new tax break, outlined by Mathijs Bouman at DutchNews.nl, will keep a flat 4 percent charge on EVs. That’s a low rate, and the state has made promises about keeping it that way. Tesla Motors, by virtue of the high prices it charges for the Model S and Model X, is exempt.

Tesla Motors faces targeted Dutch tax

The flat 4 percent rate is aimed at cars that sell for 50,000 euro or less. There’s little chance of getting a Tesla Motors Model S or Model X for that price. There’s less chance of getting any other EV at more than 50,000 euro. Most mass production EVs come in well below that, while the few models that cost more than 50,000 usually only exist in small runs.

Mr. Bouman likens the rule to the barriers to direct sales that Tesla Motors has faced in the US. He reckons the tax system is “Crony capitalism the Dutch way.” He says that the 50,000 cap on cars that will get the new lower tax was not the idea of the cabinet, but of dealer network lobby Bovag and car import and manufacture lobby Rai.

He’s clear about what he sees as a manipulation of the political system. “It’s traditional car makers and dealers using their political influence to put one over on a new and potentially dangerous competitor. As a result the consumer suffers and the technological advances of electrically powered cars are being sabotaged,” Mr. Bouman wrote.

Europe is not a haven for Tesla Motors

The concept of Europe often conjured is an image of progress. Like the US, Europe is a big place. It’s full of all sorts of different countries with completely different legal systems, often down to the base principles on which the law stands. It’s also full of interest groups that are threatened by firms like Tesla Motors.

In Norway Tesla Motors  has made huge gains because of massive state support. In Germany, a moderately progressive country with a huge auto industry, Tesla Motors has done markedly less well. There is relatively little state support for EVs in Germany. Until Mercedes can compete with Tesla Motors, that’s not likely to change.

Tesla Motors has set itself against an entire industry, and one that has huge space to protect in Europe, in the US and in Asia. The firm is going to have to break through those walls. That’s going to take time, popular support and cultural change.

The image of Europe, with its progressive population and relative lack of powerful climate change denying groups, as a Tesla Motors haven is a broad stroke.

The Netherlands, one of the most forward thinking states in the bloc when it comes to green tech, is proving that industry groups are more powerful that images of European environmental utopia. Things aren’t quite as easy as Tesla Motors would like.

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