Tesla originally planned to have a 50-gigawatt-hour battery plant at its site in Brandenburg, near Berlin, by the end of 2023. Those plans now appear to have changed, with the US manufacturer indicating that it is focusing its battery production on the US. What is the reason for that? Inflation Reduction Act (IRA), Joe Biden’s plan to boost the US economy and make life more affordable for locals.

small subsidies

One of the pillars of the IRA is additional investments in green energy, which would make the United States less dependent on fossil energy and the volatile prices that go with it. In particular, the (relatively) high prices of electricity and gasoline in the past year have been a thorn in the side of the American population, due to the Russian invasion of Ukraine and other geopolitical events.

Tesla qualifies for massive subsidies (up to $45 per kWh produced) if it starts producing more batteries on US soil, which is why Elon Musk’s car company decided to cut battery production in Berlin. In addition, US buyers of US battery electric vehicles receive a subsidy of up to $7,500. In general, this means a significant discount, both for Tesla as a manufacturer and for future buyers.

4680 cells finally ready?

Battery packs will still be made in Germany, but to a lesser extent, and battery components will continue to be produced in Brandenburg. By the way, the batteries being discussed here will be the long-awaited 4680 cells, which are cheaper to produce and should offer higher efficiency. However, its production has already accumulated a significant delay, because the cells are already presented in 2020.

On March 1, Tesla will hold an Investor Day where it will reveal its plans for the future, including a new low-cost platform for compact models. It is also likely that there will be talks about launching mass production of these new battery cells, which will be structurally built into the vehicle.