Tesla has withdrawn its application for a $1 billion subsidy to develop a battery factory in Berlin

Tesla announced on Friday that it has withdrawn its application for state aid for its proposed battery factory near Berlin, after CEO Elon Musk declared his company’s opposition to government subsidies.

The European Union agreed a proposal in January that includes offering state funding to Tesla, BMW, and other companies to encourage the development of electric vehicle batteries and help the union reduce imports from China, which leads the industry.

According to the plan, Tesla will receive 1.14 billion euros ($1.28 billion) in EU funds for its battery plant in Gruenheide, Brandenburg, with a final decision expected 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 for so-called “Important Projects of Common European Interest.”

The decision would have no impact on the plant’s construction plans, according to the spokesperson.

“It has always been Tesla’s view that all subsidies should be eliminated,” Musk responded to a tweet from another user after Tesla announced it had withdrawn its funding proposal on Twitter.

“But that must include the massive subsidies for oil & gas. For some reason, governments don’t want to do that …,” Musk continued, straying from the topic of the manufacturing grant.

According to estimates from the German economy ministry, Tesla is investing 5 billion euros in the battery plant.

Meanwhile, a representative for the federal economy ministry stated that construction of a car production site near the battery facility, which Tesla has undertaken under pre-approved permits while it awaits final approval from the regional government, has made significant progress in the last few weeks.

According to the regional government’s website, the electric vehicle producer also filed for regional assistance from Brandenburg in November 2020.

This application had not been withdrawn, according to a spokesperson for the Brandenburg economic ministry.

Tesla’s application was for an undisclosed amount, although investments worth more than 100 million euros are typically awarded 6.8% of their value, according to the website.

Last week, the latest round of online consultations for the public to raise environmental and other issues about the vehicle factory and battery facility closed, and Musk has stated that he expects to formally start production by the end of the year and ramp up as rapidly as feasible.

Musk has expressed his dissatisfaction with German laws and processes, writing to authorities in April that the country’s complex planning requirements were at odds with the urgency required to fight climate change.