Tesla has paused plans to produce entire batteries in Brandenburg, Germany, and will instead carry out some production steps in the United States, where tax incentives are more favorable, according to the Brandenburg economy ministry.
“Tesla has started its battery system production in Gruenheide and is preparing to manufacture battery cell components. The company has prioritized further production steps in the USA because tax incentives make business conditions more favorable there,” the Brandenburg economy ministry said in a statement.
The move comes after the US government offered electric vehicle makers tax breaks and consumer discounts for sourcing batteries from within the country.
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Tesla did not respond to requests for comment.
Tesla originally planned to produce the full battery at its Gruenheide site in Germany, with a peak capacity of over 50 gigawatt hours per year. However, the company has shifted its focus to carrying out production steps in the US, where it is preparing to manufacture battery cell components. The decision means the battery plant in Germany may not reach volume production by the end of 2023 as previously planned.
In 2020, Tesla CEO Elon Musk announced that the Berlin gigafactory would be the largest battery factory in the world, but the plant and car production site have hit their targets later than planned. The company has struggled to ramp up production of the 4680 battery cell at its factories in Fremont, California, and Austin, Texas, which experts have attributed to new and unproven techniques.
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Despite the challenges, Tesla announced in late January that it will invest more than $3.6 billion to expand its Nevada gigafactory complex with two new factories. One will mass-produce its long-delayed Semi electric truck, while the other will make its new 4680 battery cell. The investment is a sign of the company’s commitment to scaling up production of its electric vehicles and batteries.
