Tesla engages in a standoff with Renault and France

Here is a rivalry no one expected: the direct confrontation between the world leader Tesla and the French David Renault.

Who would have thought that the giant Tesla would have to react so quickly and strongly to the new French electric car landscape? The announcement, on December 15, 2023, of the loss of the eco-friendly bonus for the Tesla Model 3 reduced the eligibility for this government aid to just one model in the American catalog. Moreover, this vehicle is certainly very high-performing and richly equipped, but also more affordable.

Indeed, new competitors have appeared, and one in particular: the Renault Scenic. With its ultra-aggressive price of 34,990 euros, the French SUV with a more “pragmatic” technical sheet took a psychologically very strong lead. This candidate for the title of Car of the Year 2024 is beginning deliveries and is heavily occupying media space, especially on television.

The “Made in France” aspect is also running at full throttle, as consumers are becoming increasingly sensitive to it.

But beyond this rivalry, which is ultimately very healthy for the consumer, the question of the ecological bonus arises once again. What is the margin depth for manufacturers on this type of vehicle? The mechanics are well established: loudly proclaiming that electric cars are more expensive to produce. Which is obviously false!

The cost of batteries has collapsed by 97% over 20 years, and the simplicity of off-the-shelf mechanical components also pushes prices downward.

As things get more complicated for Tesla in particular, prices can be adjusted downward by quite dizzying proportions: immediate savings of 3,000 euros for the Model Y on the morning of Wednesday, January 17, 2024. The French government’s position might make one feel taken advantage of… and so might the taxpayer, who funds ecological bonuses through taxes.

By removing the ecological bonus from a very broad range of electric vehicles, the French state has primarily aimed to expose manufacturers. The next step will be a reduction of this bonus to 4,000 euros during 2024… followed by a logical disappearance, as already the case in Germany.

And the outcome will be the same: with or without the bonus, prices will only continue to fall. That is the direction of history.