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Report: Tesla Could Receive Over $1.2 Billion in Subsidies From Germany for Battery Plant

By Eric Volkman - Feb 1, 2021 at 6:30PM

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It's atypical for a U.S. company to be granted such funding from the country's government.

Tesla Motors (TSLA -6.92%) stands to collect a nice windfall from the German government. According to a report in Business Insider published on Monday and citing "several government sources," the electric vehicle (EV) specialist will be granted at least 1 billion euros ($1.2 billion) in public subsidies to continue developing battery cells.

At the moment Tesla is building a factory, located near the national capital of Berlin, to manufacture such components.

Germany's Federal Ministry of Economics is encouraging in-country battery cell production by awarding funds from its Important Projects of Common European Interest (IPCEI) to manufacturers. Last week, it announced 11 grants from the initiative; Tesla was one of the winners.

A Tesla Model Y on the road.

Image source: Tesla Motors.

The exact amount of the Tesla subsidies has not yet been formally announced, and Business Insider quoted a ministry spokeswoman as saying that there is no general formula for determining them. One factor in this is that monies from government support initiatives are frequently shared between Germany's federal and its state governments.

Nevertheless, the magazine's sources say that Tesla's funding will be "in the single-digit billions" of euros.

Like many large-scale government pushes in Germany, the IPCEI program is aimed at helping domestic companies, so it is somewhat unusual for the U.S.-headquartered Tesla to be part of it. The government might be eager to keep the high-profile company making products in the country by providing such a sweetener.

Tesla stock had a fine day on Monday. It rose by 5.8%, trouncing the 1.6% increase of the S&P 500 index.


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