Tesla withdraws application for state funding for German battery factory

Tesla (Nasdaq: TSLA) said Friday that it withdrew its state aid application for its proposed battery factory near Berlin as CEO Elon Musk stated the electric vehicle maker is opposed to all subsidies.

The European Union approved a plan in January that provided state aid to Tesla, BMW and other companies to boost the production of batteries for electric vehicles and help the EU cut imports from industry leader China.

Tesla was expected to receive EUR 1.14 billion ($ 1.28 billion) in EU funding under the plan for its battery plant in Grünheide, Brandenburg, with a final decision likely to be made by the end of the year.

Tesla has informed the Federal Ministry of Economics and the Brandenburg Ministry of Economics that it is withdrawing its IPCEI application for state funding for the battery factory in Grünheide, "said a Tesla spokesman, referring to European funding for so-called" important projects of common European interest " .

The construction plans for the plant are not affected by the decision, the spokesman said.

"Tesla's view has always been that all subsidies should be eliminated," Musk wrote on Twitter (NYSE: TWTR) in response to a tweet from another user after Tesla announced it had withdrawn its funding request.

"But that has to include the massive subsidies for oil and gas. For some reason the governments don't want to do that ..." added Musk, deviating from the subject of the factory subsidy.

According to estimates by the German Ministry of Economic Affairs, Tesla itself is investing 5 billion euros in the battery factory.

In the meantime, the construction of an auto production facility next to the battery factory, which Tesla has begun as part of a pre-approval while waiting for final approval from the state government, has made good progress in recent weeks, said a spokesman for the Federal Ministry of Economics.

According to the state government's website, the electric car manufacturer also submitted an application for regional funding in Brandenburg in November 2020.

A spokesman for the Brandenburg Ministry of Economic Affairs said this application had not been withdrawn.

The amount requested by Tesla is unknown, but investments worth over 100 million euros are typically funded at 6.8% of their value, the website says.

The final round of the online consultation, which allowed the public to express their concerns about the environment and other aspects of the car and battery plant, ended last week. Tesla CEO Elon Musk said he hopes to officially start production by the end of the year and then ramp it up as soon as possible.

Musk has expressed his displeasure with German laws and procedures, writing in a letter to authorities in April that the country's complex planning requirements contradict the urgency of tackling climate change.

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