Tesla has not given up on producing batteries at its plant in Germany, but the company says it is prioritizing battery manufacturing in the United States because of the prospect of tax incentives.

A Wall Street Journal report from earlier this month said Tesla had paused plans for a 50 gigawatt-hour (GWh) battery factory next to its vehicle assembly plant in Grünheide, near Berlin. The business publication cited insiders as saying that Tesla looks into tapping into tax credits that will be offered to automakers making EV components, including batteries, in North America.

This led some media outlets to speculate that Tesla could drop battery production plans in Germany. However, that is not the case. Company representatives told local politicians on September 16 that it still plans to open a battery factory in Grünheide, although it is now focused on ramping up battery production in Texas faster than planned.

According to German publication Automobilwoche, this move could be supported by using German engineers and German-built components. Grünheide mayor, Arne Cristiani, told Reuters on September 19 that Tesla confirmed that its plans to open a battery plant on the site are unchanged.

Gallery: Tesla Giga Berlin (Tesla Gigafactory 4)

"Tesla put everything reported in the American newspaper into perspective. The plant is still being built."

Grünheide Mayor Arne Cristiani referring to the Wall Street Journal report

Tesla said that ideally, both battery factories would be ramped up as quickly as possible, Automobilwoche reports. However, the Biden administration's Inflation Reduction Act has caused a change of plans for Tesla, which wants to ramp up battery manufacturing in Austin faster than planned. Cell production in the United States now has priority as the new law has also provided incentives for companies that start their own battery production faster.

Interestingly, Tesla noted that high energy prices in Europe have nothing to do with the decision, because its cell production using dry electrodes is very efficient. Christiani also dismissed reports by local broadcaster RBB last week that he had removed the topic of an extension to Tesla's land from the local council agenda, saying that it was never on the agenda.

In May, the automaker applied for a land extension with plans to use it for logistics purposes, with the matter being then forwarded to the relevant community representatives. Only after these discussions are complete, the topic would come onto the agenda, Christiani noted.

Construction of the Giga Berlin-Brandenburg's battery facility is well advanced, with Tesla CEO Elon Musk saying in 2020 that he wanted to make the facility the world's largest battery factory.

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