Tesla scales back German battery plans, won over by U.S. incentives

BERLIN — Tesla has begun assembling batteries in Germany but will focus cell production in the U.S. in light of Inflation Reduction Act incentives, the company said, making it one of the firms declaring a strategy shift prompted by the package.

The U.S. electric-vehicle maker is also preparing to produce cell components such as electrodes, some of which will be sent from its site in Gruenheide in the state of Brandenburg, to the United States, Tesla said on Wednesday.

Cars produced at the Brandenburg site would in the "near future" contain batteries assembled locally, it added.

"The focus of Tesla's cell production is currently in the United States due to the framework created by the United States Inflation Reduction Act (IRA)," the company said.

EU leaders have expressed concern that local content requirements of much of the $369 billion of subsidies in the IRA will encourage companies to abandon Europe for the United States.

Tesla rival Stellantis said on Wednesday it was already localizing production in the U.S. prior to the IRA, while earlier this month industrial gases firm Air Liquide AIRP.PApledged to take advantage of a historic opportunity to invest in clean energy helped by the IRA, but did not give specific details.