The European Union in January approved a plan that included giving state aid to Tesla, BMW and others to support production of electric vehicle batteries and help the bloc to reduce imports from industry leader China.
Tesla was expected to receive €1.14-billion ($1.64-billion) in EU funding for its battery plant in Gruenheide, Brandenburg state, under the plan, with a final decision likely by the end of the year.
“Tesla has informed the Federal Ministry of Economics and the Brandenburg Ministry of Economics ... it is withdrawing its IPCEI application for state funding for the battery factory in Grünheide,” a Tesla spokesperson said, referring to European subsidies allocated to so-called ‘Important Projects of Common European Interest’.
Construction plans for the plant would not be affected by the decision, the spokesperson said.
“It has always been Tesla’s view that all subsidies should be eliminated,” Mr. Musk posted on Twitter in response to a tweet by another user after Tesla said it had withdrawn its funding application.
“But that must include the massive subsidies for oil & gas. For some reason, governments don’t want to do that,” Mr. Musk added, deviating from the subject of the factory grant.
Tesla itself is investing €5-billion ($7.21-billion) in the battery plant, according to German Economics Ministry estimates.
Meanwhile, construction of a car production site alongside the battery plant, which Tesla has begun building under preapproval permits while it awaits final approval from the regional government, has made good progress in the last few weeks, a spokesperson for the federal government said.
The electric vehicle maker also applied in November, 2020, for regional funding from Brandenburg, according to the regional government’s website.
A Brandenburg Economics Ministry spokesperson said this application had not been withdrawn.
The amount Tesla applied for is undisclosed, but investments worth over €100-million ($144-million) are generally given 6.8 per cent of their value, the website says.
The latest round of online consultations for the public to express environmental and other concerns about the car factory and battery plant closed last week and Tesla’s Mr. Musk has said he hopes to formally begin production by the end of the year and then ramp up as quickly as possible.
Mr. Musk has made his irritation for German laws and processes known, saying in a letter to authorities in April that the country’s complex planning requirements were at odds with the urgency needed to fight climate change.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.