Environment

Tesla withdraws application for $1B in subsidies for German factory, Musk implies they don’t want it

Tesla has withdrawn an application for over $1 billion in subsidies for battery production at Gigafactory Berlin.

CEO Elon Musk appears to imply that Tesla withdrew because they don’t want government subsidies, but there are other theories.

After announcing plans to build a large electric vehicle factory in Berlin, Tesla confirmed that the project would also include a large battery cell factory.

It would likely become Tesla’s first in-house volume production of battery cells.

Around the same time that Tesla made the announcement, the German government announced plans to invest billions of dollars in encouraging local battery cell production to support local electric vehicle manufacturing.

Last year, we learned that Tesla applied for that government support.

In September, we learned that Tesla could be the biggest beneficiary of the new program and secure as much as €1.14 billion ($1.35 billion).

Today, Tesla withdrew its application for the funds.

A spokesperson for the Gerrman economy ministry confirmed the news in a statement:

Tesla continues to stick to its plans for the battery factory in the Gigafactory Berlin-Brandenburg, but will do without state IPCEI funding.

After the news came out, CEO Elon Musk made a comment that suggested Tesla withdraw the applications because it doesn’t want any subsidies:

It has always been Tesla’s view that all subsidies should be eliminated, but that must include the massive subsidies for oil and gas. For some reason, governments don’t want to do that…

While the comment is not as clear since it doesn’t directly reference this application, it’s how his comment is being reported.

However, there are other theories as to why Tesla withdrew its application.

The Financial Times went into the details of the program and found a clause that might be the cause of the withdrawal. Companies are not eligible for the funds if they have already deployed the same battery production at another plant:

The EU requires any sites in receipt of the funds to be the “first industrial deployment” of the technology, according to official documents, meaning the batteries cannot already be made at another Tesla plant.

The publication suggested that ongoing delays in achieving approval to start production at Gigafactory Berlin could make Tesla ineligible for the funds since it’s also deploying battery production at Gigafactory Texas and Shanghai.

Tesla also already produces its own battery cells at a pilot production plant in Fremont, California.

It’s unclear whether pilot production would affect the application for funds, but Tesla’s pilot production is unlike most with a planned capacity of 10 GWh, which is more capacity than many full-scale battery cell factories around the world.

Electrek’s Take

Considering Tesla has been using plenty of government funds in the past, I think that’s the most likely explanation.

While I agree with Musk’s comment, the government has yet to stop giving large subsidies for the fossil fuel industry and therefore, it would be unwise and slow down the transition not to use government funds.

Also, where does it stop? Is Tesla going to refuse any further government assistance?

Tesla needs to provide more clarity here.


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