US law puts the brakes on electric car manufacturer’s battery factory plans

Berlin Thousands of jobs should be in the Teslabattery production in Grünheide near Berlin, but now the group is putting its plans on hold. The US company wants to change its battery strategy to avoid tax incentives in the US United States to benefit reports the Wall Street Journal (WSJ) on Wednesday citing people familiar with the matter.

The background to this is that the production of batteries and electric vehicles is being heavily promoted in the USA. At the same time, the US government is trying to reduce its dependence on China, among other things, with the so-called “Inflation Reduction Act”. by only promoting electric cars with a maximum tax rebate of 7,500 dollars, if assembled in the USA. The batteries also have to be manufactured mainly in the USA.

Of Tesla no comment was initially available. The company had actually planned to open its only European plant in Brandenburg to make it the world’s largest battery factory. Both cars and batteries were to be manufactured in Grünheide.

The company has been producing electric vehicles there since March. The company set a production target of 500,000 electric cars per year. But production is still under construction. The construction of the battery factory has progressed.

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The Brandenburg Ministry of Economics was not informed in advance about the realignment of the battery factory plans. At the request of the Handelsblatt, the ministry announced that the first information on this was received this Thursday. “It seems possible that Tesla will reprioritize individual process steps in the plants, but that the Grünheide site will remain under construction and with its jobs.”

Brandenburg warns of competitive disadvantages for Europe

The managing director of the business associations Berlin-Brandenburg (UVB), Sven Weickert, made a similar statement. If the battery factory project changes, it will be a company decision. “It would not change the fact that Brandenburg has already become one of the most important electric car locations in Europe,” Weickert told the Handelsblatt.

Tesla Gigafactory Berlin-Brandenburg

The company set a production target of 500,000 electric cars per year.

(Photo: dpa)

The value chain is becoming ever denser, more and more manufacturers and suppliers of components are coming to the capital region. “We therefore believe in the potential of this technology for the location,” says Weickert. “We also think that manufacturing as many components of electric cars and batteries as environmentally friendly as possible in the region is a plausible strategy.”

Irrespective of this, the Brandenburg Ministry of Economics is critical of the US government’s e-car offensive. The “Inflation Reduction Act” leads to a “competitive disadvantage in Europe”. “The EU must react here in terms of state aid in order to restore equality.”

>> Read here: Tesla increases profits with higher prices – Grünheide produces 1000 cars per week

The topic came up this Thursday at a meeting of the trade ministers of the G7 countries in Neuhardenberg, Brandenburg. This group of leading industrial nations includes Germany, France, Italy, Japan, Canada, the USA and Great Britain.

EU Economic Commissioner Valdis Dombrovskis said he had expressed his concerns to US Trade Representative Katherine Tai. There are concerns about the compatibility of the US anti-inflation law with the rules of the World Trade Organization (WTO). According to Dombrovskis, EU manufacturers are discriminated against.

Tesla had waived funding for the battery factory in Grünheide

The EU Commission had a passage in the law that only provides tax benefits for buyers of e-cars if a certain proportion of the battery parts come from the USA. already complained about in August.

There are also tax breaks, subsidies or other measures in EU countries to encourage the purchase of electric cars – but these are not designed to be discriminatory, Dombrovskis explained. The issue should be discussed in further meetings with Trade Representative Tai. One must see how this “tension” can be minimized.

Federal Economics Minister Robert Habeck (Greens) responded to a question about the effects of the US law only in general. The topic had been raised on various occasions, but he regarded it as “normal government business” to address the interests of German and European companies and fair trade.

Tesla could also have benefited from state subsidies for the planned battery production in Germany. In November last year, however, the group announced that it would not participate in the second major European project for battery cell production (EuBatIn). The company has therefore withdrawn the application for state funding for an “Important Project of Common European Interest” (IPCEI) for the battery factory in Grünheide.

The Federal Ministry of Economics supports large-scale battery cell innovation projects that are implemented as “Important Projects of Common European Interest”. At that time it was about a sum of more than 1.1 billion euros.

The company did not give any reasons for the waiver at the time. However, the group assured that it would continue to stick to its plans for the battery and recycling factory in the Gigafactory Berlin-Brandenburg.

More: German politicians are excited about plans for a Tesla battery factory in Brandenburg

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