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Biden’s IRA sees Tesla and others review European investments

Tesla CEO Elon Musk on stage at the Tesla Gigafactory in Grünheide, Germany.

Picture Alliance | Picture Alliance | Getty Images

Tesla recently announced that it is moving its strategy away from Europe as it seeks to benefit from unprecedented subsidies in the US. But the company is not alone in reassessing its investment decisions in Europe.

Many multinationals are reconsidering plans to bring new money into Europe.it comes after the president of the us Joe Biden Last year, the Inflation Reduction Act or IRA was announced. Spending on climate change and energy policy hits record $369 billion.

Landmark legislation featuring green subsidies for businesses Raising Competition Issues Unsettling for European businesses and regional politicians. Brussels is considering how best to respond.

Swedish battery manufacturer Northvolt. Linde, German chemical giant. Volkswagen, automobile manufacturers; energythe Italian energy giants have all expressed interest in profiting from US subsidies.

Evangelos Mytilineos, CEO and chairman of Greek industrial conglomerate Mytilineos, told CNBC’s “Squawk Box Europe” about additional bureaucracy in Europe: I like it,’ he said. .

When asked if he would move the business to the United States, Mitilineos replied, “It’s possible. Unfortunately, it’s not just a possibility for our company.”

It is still too early to assess how much investment may shy away from Europe as a result of Biden’s policies. But so far, the message from European companies is clear. They want local officials to do more to help them.

In a speech in February, European Commission President Ursula von der Leyen said the time had come for a “simpler and faster framework”. It welcomed the state’s efforts for a cleaner economy while stepping up negotiations with counterparts to avoid crowding.

But it can be too little or too late.

Northvolt CEO Peter Carlsson told CNBC in February that his company was working to build a North American factory. “And in the IRA making such plans [of] I got a turbo boost because I was given a very strong incentive,” he added.

Northbolt is in the process of deciding whether to move forward. Expansion in North America before doing so in Germany.

Meanwhile, Ilham Kadri, CEO of Belgium-based chemical company Solvay, said in January, “The reality is that the Biden administration is giving incentives for Europe to regulate. It’s black and white.” said.

The EU ‘recognizes it needs to do more’

Last month, Tesla cut some of its investments in Germany and decided to focus on the North American market instead of benefiting from the IRA.

“The focus of Tesla’s cell production is now in the United States because of the framework created by the U.S. Inflation Reduction Act (IRA),” Tesla said on February 22, according to Reuters. A spokesperson for the company was not available when contacted by CNBC on Thursday.

Both companies and analysts argue that the IRA’s simplicity is too tempting to pass up.

Maria Demerzis, Senior Fellow at the think tank Bruegel, said: “The IRA is first and foremost built in a very simple way, and simplicity always wins. In contrast, the European Union’s institutions are It’s much more complicated,” he said.

Solvay CEO: Europe needs to be inspired by Biden's IRA legislation

“Will companies in the European Union or elsewhere postpone investments they wanted to make in the European Union and actually benefit from the direct, very simple and immediate benefits that the IRA actually promises? ”

That’s something European officials worry about, especially at a difficult time, she added.

Economies across the EU are suffering from a cost of living crisis that cannot afford to lose critical investments. Block also wants to be independent from China and others for key materials like lithium.

“The EU is particularly aware that it needs to do more to compete internationally,” Demertzis said.

The EU’s executive body, the European Commission, is working on a sovereign fund to finance green projects, but details are not expected to be revealed before June.

Northbolt CEO: Remains committed to German plant

https://www.cnbc.com/2023/03/03/tesla-one-of-many-companies-to-review-investments-in-europe-after-biden-ira.html Biden’s IRA sees Tesla and others review European investments

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