Tesla withdraws state funding application for German battery plant

Tesla has withdrawn its application for state funding for its planned battery factory near Berlin, the electric vehicle maker said on Friday, adding that construction plans were unchanged. 

The European Union in January approved a plan that included giving state aid to Tesla, BMW and others to support the production of electric vehicle batteries and help the bloc to reduce imports from industry leader China.

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

The US carmaker did not say why it had withdrawn its application for funding. The company itself is investing 5b euros in the battery plant, according to German economy ministry estimates. 

Meanwhile, construction of a car production site alongside the battery plant, which Tesla has begun building under pre-approval permits while it awaits final approval from the regional government, has made good progress in the last few weeks, a spokesperson for the federal economy ministry said.

"Tesla has informed the Federal Ministry of Economics and the Brandenburg Ministry of Economics... it is withdrawing its IPCEI application for state funding for the battery factory in Grünheide," a Tesla spokesperson said, referring to European subsidies allocated to so-called 'Important Projects of Common European Interest'.

"However, Tesla is sticking to its plans for the battery and recycling factory in the Gigafactory Berlin-Brandenburg," the spokesperson said.

The electric vehicle maker also applied in November 2020 for regional funding from Brandenburg, according to the regional government's website.

A Brandenburg economy ministry spokesperson said this application had not been withdrawn.

The amount Tesla applied for is undisclosed, but investments worth over 100m euros are generally given 6.8 per cent of their value, the website says.

The latest round of online consultations for the public to express environmental and other concerns about the car factory and battery plant closed last week and Tesla CEO Elon Musk has said he hopes to formally begin production by the end of the year and then ramp up as quickly as possible.

Musk has made his irritation for German laws and processes known, saying in a letter to authorities in April that the country's complex planning requirements were at odds with the urgency needed to fight climate change.