Düsseldorf, Berlin Overall, Elon Musk thinks little of subsidies, but is usually happy to accept them. “None of the funds are necessary, but they are all helpful,” said the Tesla boss years ago.
For the planned battery cell production in Grünheide near Berlin, the US electric car manufacturer is now waiving possible state funding of up to 1.14 billion euros. The company informed the Federal Ministry of Economics and the Brandenburg Ministry of Economics that it was “withdrawing its IPCEI application for state funding for the battery factory in Grünheide,” said Tesla in a statement on Friday.
IPCEI is the abbreviation for an EU program for the promotion of “important projects of common European interest”. The waiver does not mean a change in the construction projects: “Tesla is still sticking to its plans for the battery and recycling factory in the Gigafactory Berlin-Brandenburg.”
Why is Tesla giving up so much money? The decision comes directly from Musk, the Tesla boss would never delegate such an important matter. What motivates him: According to experts, the IPCEI funds could reveal details of the battery technology, possibly prevent its use in other factories – and cost time.
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“Tesla may fear that they will have to make research results available to other competitors,” says Joachim Ragnitz, subsidy expert from the Ifo Institute in Dresden, the Handelsblatt. Industry insiders confirm this assessment. Projects that are classified as IPCEI-worthy by the EU Commission can be generously funded by the member states.
Many restrictions and upper limits that otherwise apply to state aid are no longer applicable; In return, the companies that benefit from the funding must be particularly innovative. It is therefore not sufficient to use methods that are already known.
Businesses also need to share insights they gain from government aid. There is speculation in industry circles as to whether Tesla seemed too risky. “It is quite possible that Tesla does not want to lead this debate and does not simply want to reveal innovations,” says an insider.
Grünheide as a model factory
In Grünheide, Tesla wants to build one of the most modern battery cell production facilities in the world. The so-called 4680 production is planned: these are particularly large, cylindrical battery cells that have a diameter of 46 millimeters and are 80 millimeters long. Numerous other innovations are also planned, such as the dry coating of the electrodes in order to lower the price per kilowatt hour – a decisive factor in the sale of electric cars.
The technologies are also to be used in other plants. For example, Tesla is planning a battery production facility in Austin and will also expand the plant in Shanghai accordingly. The use in the USA and China could possibly be made more difficult by the subsidies. Because the IPCEI funding assumes that new research results are primarily implemented in the EU.
In addition, there is the time pressure: Tesla already built the car factory in Grünheide with high risk and provisional permits in order to finish faster. The final approvals from the state of Brandenburg are still pending, a decision is expected in a few weeks.
Tesla urgently needs the plant. The US electric car manufacturer has to meet the high demand for its vehicles. So far, Tesla has made do with imports from China in Europe, but production capacities there are also limited, and demand in Asia is increasing.
Auto expert Dudenhöfer: “Our funding is amateurish”
500,000 vehicles are to roll off the production line in Berlin every year. But that won’t be the case until 2023. The Gigafactory will start up slowly next year, annual production will be limited to 10,000 vehicles. To do this, Tesla will still have to import battery cells.
But in order to achieve the high production volume, Tesla also wants to manufacture battery cells in Grünheide in the future. Batteries are important and valuable components in electric vehicles. Therefore, Tesla cannot afford to delay the battery cell factory.
Funding from the EU would have been linked to specifications. According to the experience of car expert Ferdinand Dudenhöffer, subsidies are “far too complex” and time-consuming. Not only Tesla, but almost all German manufacturers would forego subsidies.
“Elon Musk shows us how amateurish our funding is,” says Dudenhöffer, who as a professor spent more than ten years trying to get public funds at a college and university. They are too expensive, time-consuming and tedious to get.
Concern for image
Another reason for Musk: the image. Critics of the company have long argued that Tesla would never have grown this big without subsidies.
The allegation irritates Musk to the point of blood – as a reaction in 2015 to an article in the “LA Times” showed. “Outrageous” he called a report on the nearly five billion dollars in subsidies that Tesla and its subsidiaries have received. The article was misleading, argued Musk, that the funds would be paid out over 20 years and were subject to strict conditions. After all, the oil and gas industry is also subsidized.
The report marked a turnaround at the time: Tesla has since accepted almost no direct government aid, as an analysis by the US foundation Good Jobs First shows. The only exception: $ 65.4 million that Tesla will receive from the US state of Texas for the new factory in Austin.
More: Tesla plans for a battery factory near Berlin are becoming more concrete – production will start in 2022