Tesla Is Close to Model 3 Approval for Europe Sales

(Bloomberg) -- Tesla Inc. has yet to obtain approval from authorities in Europe to begin selling the Model 3 in the region, though this isn’t expected to impede the carmaker from starting deliveries next month, according to a person familiar with the matter.

The company has been working in close collaboration with authorities and expects to receive certification after some personnel return from the holidays, said the person, who asked not to be identified because the deliberations aren’t public. This timing is in line with what Tesla has been targeting for months, the person said.

Starting Model 3 deliveries in Europe is a key priority for Chief Executive Officer Elon Musk. He’s pointed to sales of the sedan in Europe and China as a main reason he isn’t concerned about any potential setback caused by the U.S. federal tax credit toward Tesla purchases halving to $3,750 as of Jan. 1.

Tesla is targeting the BMW 3-Series and VW Golf with its Model 3. While pickup trucks and SUVs account for about 70 percent of U.S. vehicle sales, Europeans still favor cars.

“We’re excited to bring Model 3 to Europe and China early next year, given that the market for midsize premium sedans in those regions is even larger than in North America,” Musk said during the October earnings call.

Tesla previously obtained approval for safety, noise, environmental and production requirements through the Dutch regulator known as RDW. Under European Union rules, once an automaker’s new vehicle has been certified by one national authority, the approval is applicable across the trade bloc.

The company has started receiving systems-type approval for components of the vehicle and is awaiting whole-vehicle-type approval, which is expected to be imminent, the person said. Thérèse de Vroomen, a spokeswoman for RDW, said the vehicle authority doesn’t provide information about its type approval process.

Concerns about the shrinking U.S. tax credit and Tesla’s decision to cut prices by $2,000 to partially offset the lower incentive sent the carmaker’s shares plunging 9.7 percent during the first two trading days of the year. The company also reported fourth-quarter deliveries Wednesday that fell just short of analysts’ estimates.

To contact the reporters on this story: Dana Hull in San Francisco at dhull12@bloomberg.net;Elisabeth Behrmann in Munich at ebehrmann1@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Melinda Grenier

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