The German government announced this week that 1,050 owners of the Tesla Model S would have to pay back a subsidy used to buy the car because the company no longer met eligibility terms for the reduced prices. 

The Federal Office for Economic Affairs and Export Control (BAFA) said that only vehicles costing 60,000 euros ($69,946.37) or less qualified for Germany‚Äôs "environmental bonus," according to a statement Tuesday. BAFA said it tried to negotiate the matter with Telsa over the past few months but failed to agree on a deal.

About 800 Tesla Model S owners who bought their vehicle in March must pay back 4,000 euros (about $4,650) of an electric vehicle subsidy, according to Reuters. The Model S lost its subsidy eligibility in November after Germany discovered Tesla was producing cars well above the 60,000 euros price tag.

"The subsidy needs to be repaid by 800 people who had received it, and another 250 customers who had been notified they were eligible and who will now not receive it," a spokeswoman said on Wednesday, adding that those who bought a Tesla costing less than 60,000 euros can apply for the bonus.

Tesla, meanwhile, plans to appeal the decision and said it would pay customers for the bonus until the matter comes to a resolution. The electric car brand added that German Tesla customers have always had the option of purchasing a base version of the Model S, which met the standards for the subsidy.

"The arbitrary decision to temporarily remove Tesla from the list of vehicles eligible for the Environmental Bonus (Umweltbonus) was unjustified, contrary to the stated goals of the program, and unfair to our customers," a Tesla spokesperson said in an emailed statement.

"We are appealing [the German government's] decision to take this action against our pre-March 2018 customers. To make sure our customers are not harmed by this decision, we will cover the cost of the bonus for them until the issue is resolved."

Shares of Tesla (TSLA) gained 0.36 percent on Wednesday to close at 323.85.