Tesla declines German grant for battery plant

Tesla is foregoing a possible government subsidy of billions of euros for the planned battery cell production in Grünheide. In September, it was still said that the Californian company could expect a subsidy of 1.135 billion euros.

The Deutsche Presse-Agentur learned about the waiver of these state subsidies from the Federal Ministry of Economics. According to the news agency, Tesla has informed both the Federal Ministry of Economics and the Brandenburg Ministry of Economics that it does not wish to pursue participation in the second major European project for battery cell production (EuBatIn). For this reason, the company has withdrawn its application for state IPCEI funding for the battery factory in Grünheide.

Tesla will continue to adhere to its plans for the battery and recycling factory in the Gigafactory Berlin-Brandenburg. The renunciation of funding is therefore not related to the abandonment of the overall project – however, the move is likely to fuel speculation as to what other calculations are behind this step.

In September, it was reported that the state subsidy for the planned battery cell plant, which is to be built near the vehicle factory in Grünheide, could amount to 1.135 billion euros. According to the newspaper report, the subsidy was – as of September – not yet official, but probably “agreed with all parties involved and ready for approval”. Among other things, the aid had already been approved by the EU Commission. According to local media reports, the decision was to be handed over in the fourth quarter of 2021.

At the time, the newspaper mentioned some interesting facts about the subsidy amount: For example, the amount of a good one billion euros mentioned made up one-third of the entire second IPCEI programme. As is well known, its funding volume of up to 2.9 billion euros is divided among 42 companies in twelve countries. And: the total investment in the battery cell factory in Grünheide is likely to be around five billion euros. That is the estimate of the Federal Ministry of Economics and Technology; there is no official statement from Tesla. In return, according to information from September, the BMWi expects “the creation of 2,000 or more jobs in the battery area of the Grünheide plant”. Previously, there had been talk of 1,000 new jobs to add to the 12,000 or so jobs expected at Gigafactory 4.

As dpa has now learned from the Federal Ministry of Economics and Technology, the government subsidies not used by Tesla will now be made “available for other projects”.

Some time ago, Tesla CEO Elon Musk announced a “long-term capacity of over 100 GWh” for the cell plant in Grünheide. The electric car manufacturer wants to produce its new 4680-format cells on site. Musk presented these at Battery Day in September 2020. They are not only intended to improve the range and performance of electric cars, but are also cheaper per kilowatt-hour and significantly reduce the investment costs in their production.

In the meantime, vehicle production at the Grünheide site is supposed to reach 500,000 vehicles, but is lagging behind schedule for licensing reasons. According to a recent statement by Brandenburg’s Minister of Economic Affairs, Jörg Steinbach, the first electric cars are to roll off the production line this year.

Elon Musk took to Twitter to explain his reasoning: apparently the price for loans was too high.

We learned our lesson with $465M DoE loan received in 2010/2011 – onerous terms exceed value of money received. That’s why we paid it back so early, despite an early repayment penalty.
— Elon Musk (@elonmusk) November 27, 2021