Tesla does not receive a 1.14 billion euros subsidy for battery factory near Berlin

Tesla is going to build its planned Gigafactory in Grünheide, near Berlin, without 1.14 billion euros in EU subsidy. According to Bloomberg sources, this is because Tesla no longer meets one of the conditions of the subsidy.

The Bloomberg source, who is “familiar with the matter,” explains that it is a condition that the battery technology, the 4680 cells, must be produced first at the plant in question. Due to the occasional delay in this Gigafactory, the new cells are expected to be the first to be produced at Tesla’s plant in Texas. Tesla’s eligibility for the subsidy would therefore expire.

The German government does not delve deeply into the matter. Ars Technica writes that Germany only reports that “Tesla is sticking to its plans for a battery factory” and that “the subsidy that Tesla would receive is now available for other projects.” Tesla CEO Elon Musk says in a reaction only that ‘Tesla has always been of the opinion that all subsidies should be abolished’ and gives no further explanation. CNBC also writes that Tesla also has a subsidy application open with the state of Brandenburg.

The battery factory will be close to the Gigafactory Berlin-Brandenburg, the construction of which is well underway. Tesla is aiming to start production there before the end of the year, but final approval for commissioning has not yet been obtained, for environmental reasons. The planned battery factory will cost Tesla 5 billion euros, according to CNBC, but it is expected to be slightly more than a billion euros on top of that.

Tesla’s 4680 cells should further increase the range and reduce costs in electric cars. The cost savings achieved with these new cells should, among other things, lead to an electric car that costs USD 25,000 within three years, and thus arrive at the same or lower price level as a car with an internal combustion engine. Tesla claimed this during its Battery Day presentation in September last year, where it also provided a lot of technical information about the new cells.