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BMW Suffers Big Setback Against Tesla in California

NEW YORK (TheStreet) — BMW’s (Xetra:BMW) Tesla-challenger, the i3, was engineered to get special regulatory status in California to enable it to compete effectively against the Tesla (TSLA_) Model S. Just in time for BMW’s customers to start placing their orders, this critical BMW selling point has been removed, resulting in a huge victory for Tesla as well as BMW’s other competitors.

So what does this mean for investors and consumers?

Let’s start with California’s incentives for buying a plug-in electric car, and why it’s so important for sales.

California is by far the largest market for plug-in electric cars in the world. It is estimated that some 40% of GM’s (GM_) electric car sales are to California, and 50% of Tesla’s. The numbers are probably almost as high for GM’s and Tesla’s main electric car competitors — Ford (F_), Nissan NSANY and Toyota (TM_).

While there are many reasons for this, including technology and culture, a major incentive for buying a plug-in car in California is the right to drive in the carpool lane solo during rush hour. Anecdotally, Chevrolet car dealers have told me that approximately half of Volt buyers come into the store asking for “the carpool lane car.”


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