(Reuters) – Tesla Inc is suspending plans to make battery cells in Germany as it looks at qualify for electric vehicle and battery manufacturing tax breaks in the United States, the Wall Street Journal reported on Wednesday, citing sources familiar with the matter.
The electric vehicle maker has discussed moving equipment used to make cells to the United States, originally intended for use in the German factory, according to the report.
The Inflation Reduction Act, which President Joe Biden signed last month, provides electric vehicle makers that source batteries from within the United States with tax breaks.
Tesla did not immediately respond to a Reuters request for comment.
The law also gives some buyers a $7,500 tax credit if they purchase EVs whose batteries meet certain sourcing requirements.
The company is looking to ramp up production of its electric vehicles at its new factories in Germany’s Berlin and Austin, Texas to meet rising demand.
The manufacturing sector has been affected by soaring energy costs in Europe due to the Russian invasion of Ukraine. The geopolitical tension has also caused prices of materials used in batteries to rise.
(Reporting by Akash Sriram in Bengaluru; Editing by Maju Samuel)
