On Sept. 14, the Wall Street Journal reported that Tesla will suspend plans to manufacture batteries in Germany in order to seek eligibility for electric vehicle and battery manufacturing tax incentives in the United States, citing people familiar with the matter. Tesla has been working to produce batteries in-house and has discussed shipping battery manufacturing equipment it had intended to use at its Berlin plant to the U.S., people familiar with the matter said.
In August, President Joe Biden (Joe Biden) signed the Inflation Reduction Act, which provides tax incentives for electric vehicle manufacturers that purchase batteries in the U.S., and also provides a $7,500 tax credit for some buyers of electric vehicles that meet the battery purchase requirements.
Analysts point out that the new U.S. tax credit could offset more than one-third of the cost of electric vehicle battery packs, as long as the batteries for electric vehicles are manufactured and packaged in the United States.
Tesla's shift in battery strategy comes at a time when the escalating situation in Russia and Ukraine and soaring energy costs in Europe have affected the manufacturing industry. And geopolitical tensions have led to higher battery material prices. And Tesla is looking to boost electric vehicle production at new plants in Berlin, Germany, and Austin, Texas, to meet growing demand.
Tesla's move reflects new U.S. laws that are reshaping the electric vehicle industry, accelerating competition to secure domestic supplies of batteries and related raw materials. Shortly after Biden signed the new law, Tesla told officials in Texas that it was looking for a site for a lithium refining plant. Lithium, a key battery raw material, is currently processed primarily in China.
Tesla did not immediately respond to a request for comment.