Tesla hits breaks on slated battery factory in Germany: report

Tesla has paused plans to make battery cells in Germany as it looks to qualify for tax breaks for electric vehicle (EV) and batter manufacturers in the United States, the Wall Street Journal reported.

Manufacturing batteries domestically could make the Texas-based electric car maker eligible for tax credits under the newly passed Inflation Reduction Act (IRA).

Signed into law in August, the IRA sets sourcing requirements for federal EV subsidies meant to prod automakers into using EV batteries produced in North America as well as critical materials sourced from North America or countries with which the United States has a free trade agreement.

Buyers can also benefit from a $7,500 tax credit for purchasing an EV, provided that the car’s final assembly is carried out in North America and that the raw materials for the batteries are sourced in the same region.

The Journal cited sources familiar with the matter as saying Tesla has discussed shipping cell-making equipment meant for use at its factory near the German capital to the United States.

Tesla had previously planned to build a battery factory in Germany, in addition to the existing car factory near Berlin, with the possibility of some of the batteries being sent to the United States.

The company led by billionaire Elon Musk is studying the implications of the new US law and is postponing its project in Germany until then, according to the Wall Street Journal sources.

Tesla did not immediately respond to a request for comment from AFP.

The company is studying the possibility of building a lithium refinery in Texas and is seeking tax breaks from the state to complete the project. It sent an application to the Texas Comptroller at the end of August, a few days after the IRA was passed.

The finished product, battery-grade lithium hydroxide, would be shipped by road and rail to various Tesla battery plants throughout the United States, the application said.

Tesla said it was “still evaluating the feasibility of this project” and is also studying the possibility of building a similar site in the state of Louisiana as an alternative.

Agence France-Presse

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