Tesla is one of the first companies to publicly announce a strategic move as a result of the Inflation Reduction Act (IRA) incentives. The company stated Tesla has started assembling batteries in Germany but will concentrate cell production in the U.S.
Tesla announced on February 22 that it is getting ready to create electrodes and other cell-related parts at its facility in Gruenheide, Brandenburg, Germany. Some of these parts would then be shipped to the US.
Leaders of the EU have voiced concerns that local content criteria for a large portion of the $369 billion in IRA subsidies may encourage businesses to move from Europe to the US.
Stellantis, a Tesla competitor, claimed that it had already localized production in the U.S. before the IRA, and Air Liquide, a manufacturer of industrial gasses, promised earlier this month to seize a historic opportunity to invest in clean energy made possible by the IRA.
Whilst Germany’s finance minister has cautioned Europe not to respond to the U.S. act with excessive subsidies, the European Commission has recommended easing limitations on state aid for investments in renewable energy, decarbonizing industry, hydrogen, or zero-emission vehicles.
Meanwhile, in November 2021, Tesla withdrew its request for more than 1 billion euros in German state assistance for the battery facility, and Elon Musk, the company’s CEO, tweeted at the time that “all subsidies should be terminated.”
Musk predicted that the German 50 GWh battery factory will achieve volume production by the end of 2023, however, the plant and the car manufacturing site achieved their goals later than expected.
Experts have linked Tesla’s difficulty ramping up battery cell production in Fremont, California, and Austin, Texas, to the company’s use of novel and untested techniques.
On March 1, the EV manufacturer will have its inaugural investor day, outlining the third phase of its “Master Plan,” which Musk has stated will be centered on ramping up car production and the supply chain for battery materials.
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