German Bank Received Tesla Giga Berlin Project Finance Application, New €1.55B to Promote Domestic Battery Production

Featured image: Patrick Pleul via Getty Images

The Ministry of Economic Affairs and Energy has allocated 1.55 billion euros to promote the production of batteries in Germany. Germany Bank Received Tesla Giga Berlin project finance application to promote domestic battery production. Two consortiums are currently seeking funding, Tesla and Opel/PSA. 

Financial support notifications have not yet been sent, so the federal government cannot provide any information on the amount of financing and requirements for companies. The federal government expects the EU Commission to approve Tesla's funding application in mid-2020, and only then can specific grants be identified. A part of the notifications will be a request for assistance item so that financing for commercially successful projects can be obtained.

The request about Tesla was submitted by Abgeordneten Alexander Ulrich, Fabio De Masi, Jörg Cezanne, Klaus Ernst, Michael Leutert, Thomas Lutze, Pascal Meiser, Victor Perli, Bernd Riexinger, Dr. Sahra Wagenknecht, Hubertus Zdebel and the DIE LINKE parliamentary group.

"The Tesla company plans to build a Gigafactory in Grünheide, Brandenburg, and a research and design center in Berlin. From July 2021, up to 500,000 electric vehicles will roll off the assembly line every year in an initial phase."

A first application for funding for the Giga Berlin has been received by the Promotional bank of the State of Brandenburg ILB at the beginning of October. Tillmann Stenger assumes a funding amount of "well over 100 million euros."

According to government spokesman Florian Engels, Tesla, like any other company, will be provided with funding opportunities through a joint task to improve the regional economic structure (GRW) and ESF for further education to train skilled workers. For large companies, investments of up to 50 million euros can be subsidized up to 20%, from 51 million to 100 million euros to 10% and from 100 million euros to 6.8%.

The above representatives are also trying to clarify a number of questions and received answers to them.

Question: Does the Federal Government have concerns about the state aid notification procedure for current tenders and, above all, about the announced extensions due to Tesla's announcements to the EU Commission?

Answer: All companies that are subject to the state aid review by the European Commission have participated in the national funding announcement and went through the regular selection process. The Federal Government will now await the result of the tests by the European Commission.

Question: Does the Federal Government have information on further applications for Tesla funding to the Brandenburg Investment Bank (ILB), Berlin Investment Bank (IBB) or other funding institutions?

Answer: To the best of the knowledge of the Federal Government, there are no further applications for funding from Tesla in the Investment Bank of the State of Brandenburg or in the Ministry of Economy, Labor and Energy of the State of Brandenburg, in addition to an application for regional aid.

Question: Is there any competition for funding between Tesla and Opel/PSA, and what criteria will be used to decide on the allocation of funds?

Answer: The European Commission has already granted state aid approval to promote the PSA / Opel project. The grant notification is currently being drawn up by the responsible federal government agencies. The European Commission is currently in the so-called “pre-notification” phase. The European Commission will not decide on the approval of the corresponding aid and its maximum amount until the notification, which is expected to take place in mid-2020. Only with the aid approval of the commission will essential determinations be made, which are the basis for the assessment of a possible funding amount by the Federal Ministry for Economic Affairs and Energy.

Question: To the best of the knowledge of the Federal Government, are the 6.8 percent of Tesla grants that are permitted for investments of over EUR 100 million in Brandenburg fully utilized, and how much will the subsidies be?

Answer: The actual amount of the maximum funding that is theoretically possible under grant law depends on the pending decision by the European Commission to approve the aid. No statement can therefore currently be made on this.

Provided that the state aid approval is given, a possible funding rate (GRW-G) in the Oder or Spree district is calculated according to the formula given in the EU's regional funding guidelines as follows:

• For part of the investment up to EUR 50 million, 20% of the eligible costs
• For the part of the investment of 50 to 100 million euros 10% of the eligible costs
• For the part of the investment over 100 million euros max. 6.8% of the eligible costs

(each based on the eligible investment costs)

Question: What measures does Tesla have announced in the ongoing environmental approval process for Grünheide, to the knowledge of the Federal Government, and does the Federal Government see possible dangers for drinking water supply and waste water disposal in Brandenburg?

Answer: The application has not yet been examined. Therefore, no information can currently be given on this question. However, a risk to the drinking water supply and wastewater disposal is excluded.

Also in January, Germany Economy Minister, Peter Altmaier, mentioned Tesla Giga Berlin project in Germany could be able to get subsidies. As the Germany strict emissions regulations threaten the demand for older technologies such as diesel engines, the government has provided financial support for the local production of electric vehicle battery cells as a way to ensure employment in manufacturing for the country.

Minister mentioned certain requirements are needed to fulfill for qualification of the subsidies such as battery efficiency and others. "Also, Germany has to be more than an extended workbench. There needs to be research and development too. All companies that fulfill these criteria have a chance to be supported - including Tesla."