Tesla Withdraws Application For $1.3B In German Subsidies

Tesla, Inc. TSLA has opted to forgo subsidies from the German government even as it pushes ahead to expedite the opening of its Giga Berlin. What Happened: Tesla has told German authorities that it will not avail of the 1.14 billion euros ($1.3 billion) of state aid for its planned battery production facility in Grünheide, a municipality in the Oder-Spree District, in Brandenburg, which is situated 30 kilometers south-east of Berlin, a German news agency reported, citing the country's Federal Ministry of Economics.

"Tesla continues to stick to its plans for the battery factory in the Gigafactory Berlin-Brandenburg, but will do without state IPCEI funding," a spokesperson to the ministry reportedly said, confirming the withdrawal of the application for funding by Tesla. Later, Tesla's Elon Musk confirmed the same by replying to the report shared by a Twitter user. It has always been Tesla's view that all subsidies should be eliminated, he said.

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Why It's Important: Musk has always been criticized for using taxpayer money for furthering his businesses that include Tesla and his SpaceX unit. Musk also shared an old tweet of an L.A. Times news story from 2018, accusing Tesla of using $4.9 billion in government funding to build his businesses.

The Tesla CEO said the article was meant to be counter an IMF study showing fossil fuel subsidies amounted to $5 trillion per year. He added that the combined market-cap of Tesla and SpaceX is now $1.2 trillion, and the $4.9 billion is less than 0.4% of the combined company value.

Construction at the German factory is almost complete and Tesla is planning to start assembling the Model Y vehicles at the plant before the end of the year. The company has yet to secure final approval for commencing operations.

At last check, Tesla shares were down 2.72% at $1,085.59.

TSLA Price Action: Tesla shares lost 3.05% Friday, closing at $1,081.92. 

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