Tempting US tax breaks?
Tesla’s battery cell factory near Berlin is on the brink
09/14/2022, 9:26 p.m
Rising energy costs in Europe and tax benefits seem to be causing Tesla to rethink a planned battery factory in Germany. The new cell production plant could be built in the USA instead of in Berlin.
Electric car pioneer Tesla is apparently shelving its plans to manufacture battery cells in Germany in order to qualify for tax breaks for manufacturing electric vehicles and batteries in the United States. According to people familiar with the matter, Tesla Inc, which is working to produce its own batteries for electric cars, has considered relocating cell manufacturing facilities to be used at the plant near Berlin to the United States. The “Wall Street Journal” also reports on the car manufacturer’s change of plan.
Manufacturing more batteries in the US could help Tesla qualify for additional tax breaks under the Inflation Reduction Act (IRA) that US President Joe Biden signed into law last month. The law provides production tax credits that analysts say could offset more than a third of the cost of electric car battery packs – assuming the rechargeable cells are made and packaged in the United States.
Tesla’s move reflects how the new US law is reshaping the electric car industry and accelerating the race to secure domestic battery cell supplies. In the days after the U.S. law went into effect, Tesla told Texas authorities it was scouting regional sites for a factory to refine lithium, a key battery raw material now primarily processed in China.
Tesla’s change in battery strategy also comes at a time when energy costs in Europe have skyrocketed as a result of Russia’s invasion of Ukraine, weighing on manufacturers.