Tesla will refuse government aid of € 1.14 billion ($ 1.3 billion) for a plant it is building in Germany because it decided to first try to produce a new type of battery pack in Texas.
An electric vehicle maker worked on what it calls 4,680 battery cells at a site near its auto plant in Fremont, California. CEO Elon Musk said last year that after the company has proven it can produce them on a pilot assembly line, it will manufacture them on a large scale in a plant it is building outside of Berlin.
This gave Tesla the right to receive public funds from Germany as part of the European Union's Important Project of Common European Interests (IPCEI) initiative, which supports the first industrial roll-out of battery projects in member states. Now that Tesla has changed its mind and continues to produce 4,680 batteries at its plant under construction in Austin, Texas, the company is no longer eligible for the money.
Tesla has told German authorities that it will not use the support package, Economic Ministry spokeswoman Beate Baron said on Friday.
"Tesla has always believed that all subsidies should be canceled ..." - Musk tweeted after the ministry's statement.
Musk, who also runs rocket maker SpaceX, has bristled with detractors for years who criticized him for using government support. An example is the US loan that helped Tesla launch the Model S sedan, which the company paid off ahead of schedule. SpaceX is the prime contractor for the National Aeronautics and Space Administration and the US Department of Defense.
Tesla has almost completed construction of an electric vehicle plant in the small town of Grünheide, southeast of the German capital, and plans to produce battery cells there.
Although Musk wants to start assembling the Tesla Model Y in Grünheide by the end of the year, local authorities still have not given final approval for the project.
According to the German Ministry of Economy, Tesla is investing about 5 billion euros in Grünheide. Tesla's decision was reported on Friday by Der Tagesspiegel.