Tesla was forced to reject more than 1.1 billion euros in European subsidies for its proposed battery facility near Berlin after delays to the flagship project violated a crucial funding condition.
The electric vehicle manufacturer had sought the funds through an EU program aimed at growing the continent’s battery industry. According to official documents, the EU mandates that any facilities receiving funds be the “first industrial deployment” of the technology, implying that the batteries cannot already be manufactured at another Tesla plant.
However, legal obstacles to the plant’s development, which will initially make automobiles before generating batteries, have caused it to be delayed by many months. That implies the corporation, which was valued at $1 trillion earlier this year, will most likely start making the identical batteries abroad sooner rather than later. Tesla no longer seeks subsidies, according to the German government, which declined to speak further on Friday. The German economics ministry stated that “Tesla is sticking to its plans for the [Brandenburg] battery factory,” adding that “state subsidies not used by Tesla are now accessible for other projects.”
Elon Musk, Tesla’s CEO, has already expressed his dissatisfaction with the plant’s poor pace and called for German bureaucracy to be reduced. Employees at the facility will elect a works council in the coming days, giving them the right to stall or reject management decisions. “It has always been Tesla’s stance that all subsidies should be eliminated,” Musk said on Twitter on Friday, “but that must include the large subsidies for oil and gas.”
Tesla has received government assistance in the past for various development projects across the world.
Separately on Friday, a business filing in China showed that Tesla aims to increase capacity at its Shanghai auto facility by approximately a third, allowing the company to grow production in the world’s largest electric car market.
The US automaker will invest Rmb1.2 billion ($188 million) to expand capacity at the plant, bringing the maximum number of employees from 15,000 to 19,000. Musk has set a lofty target of producing 20 million vehicles per year by the end of the decade, a feat that, if achieved, would put Tesla on par with Volkswagen and Toyota, the industry’s two largest producers today.
Despite most of its competitors cutting output due to worldwide chip shortages, Tesla is on target to produce close to 1 million vehicles this year. Tesla reported a 57 percent increase in revenue to $13.8 billion in its third quarter, compared to the same period a year ago, and a record quarterly profit of $1.6 billion.
Last month, Musk informed Tesla investors that the Shanghai plant was already producing more vehicles than the company’s flagship operation in Fremont, California.
The Model 3 and Model Y are manufactured in China, where they are sold locally and exported to Europe.