Tesla scales back German battery plans, won over by U.S. incentives
Tesla Inc. started making batteries in Germany but will now concentrate on making cells in the US as a result of the Inflation Reduction Act (IRA). Companies that adhere to local content criteria can receive $369 billion in subsidies from the IRA. Tesla intends to manufacture some cell parts in Gruenheide and ship them to the US. The Brandenburg plant in Germany will produce cars using locally produced batteries. Tesla has reaffirmed its commitment to the US and stated that the IRA’s legal environment has caused it to concentrate its cell production there for the time being.
One of the first businesses to announce a change in strategy in reaction to the Internal Revenue Arrangement is Tesla (IRA). Leaders of the European Union (EU) are worried that the subsidies’ local content requirements may encourage businesses to move from Europe to the US. Stellantis, a Tesla competitor, has asserted that the IRA has little impact on their business plan. The IRA is expected to give Holcim AG, the biggest cement producer in the world, a boost for its business in North America. According to Linde, the company’s potential investment opportunities over the next ten years in the US alone might reach more than $30 billion.
The German finance minister has cautioned Europe against responding to the IRA with excessive subsidies, despite the European Commission’s proposal to relax the restrictions on public aid for investments in renewable energy, hydrogen, or zero-emission vehicles. Although Tesla withdrew its request for more than €1 billion in German state help for the battery factory, the Brandenburg government is still considering its application for regional support.
By the end of 2023, Tesla hopes to start mass producing its 50 gigawatt-hour battery factory in Germany, but both the plant and the location where cars are made have faced setbacks. Notwithstanding objections from EU politicians, Tesla is transferring its emphasis to the US for cell manufacture in response to the IRA tax advantages. One of the first companies to announce a strategic shift as a result of the IRA is Tesla.
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