Germany is buying more electric cars than California. That's good news for Tesla.

• Electric-vehicle sales in Germany are booming.
• The growth has been fueled in part by aggressive subsidies for buyers.
• Tesla, set to open a factory near Berlin in 2021, has benefited from similar incentives in the US, Europe, and China.

Europe's largest market for electric vehicles is leaving the United States in its dust, and it could only mean good things for Tesla's growing presence in the region.

Germany registered 98,370 battery-powered cars in the first 9 months of 2020, according to a new report from Berlin-based Schmidt Automotive Research, compared to 73,166 in California, where growth has slowed this year.

Growth in the country has been fueled by aggressive subsidies of up to 9,000 euros per car, Bloomberg News reported. The European Commission hopes to have 30 million electric cars on the region's roads by 2030, an aggressive target it hopes to reach with even more stringent emissions rules.

Tax incentives have helped Tesla in the US, but those benefits have virtually disappeared for would-be buyers. Instead, Tesla is following the money to Europe (and China).

"I'm a big fan of Germany," Elon Musk said at an event hosted by Axel Springer on Tuesday. Tesla's factory near Berlin is set to open in 2021 with an annual target capacity of building 500,000 vehicles annually, more than the company's total 2019 sales.

Read more: Tesla is in just the right position to compete in the world's biggest electric-car markets - and justify its insane market cap

But its entrance in the backyard of automotive legends like BMW and Volkswagen hasn't gone unnoticed by the competition. The latter Germany-based company has EV's planned across all of its brands through an initiative dubbed, quite appropriately, "Mission T."

"Everything is set up to become, on the technological basis, competitive with Tesla," CEO Herbert Diess said on a November conference call regarding the automaker's five-year investment plans.

But that's not to say the US is worthless to Tesla going forward. President-elect Joe Biden has ambitious climate goals, with electric vehicles front-and-center. He's proposed tax credits for consumers that would help lower the sticker price on Tesla's relatively expensive cars for buyers, as well as an expansion of the tax credits for automakers. The latter are a major source of Tesla's newfound profits.

Biden's also pledged to switch the US government's 3 million auto purchases a year to electric ones that are manufactured domestically, while increasing consumer rebates on trade-ins of older gas-guzzlers in a plan not unlike "cash for clunkers."

All together, the plan could help fuel "a 20-fold increase in the number of EV charging stations, which would really help the electric vehicles in the adoption," CFRA Research's Garrett Nelson said in October. Tesla, already miles ahead of the US competition, would be a clear winner of further EV adoption, Nelson said.