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Note that this is not Tesla specific. The funding is based on a very good EU initiative. Any battery manufacturer can apply: https://europe.autonews.com/automa

Note that this is not Tesla specific. The funding is based on a very good EU initiative. Any battery manufacturer can apply: https://europe.autonews.com/automakers/tesla-bmw-stellantis-others-approved-share-35b-eu-battery-aid https://europe.autonews.com/automakers/tesla-bmw-stellantis-... Money well spent in my opinion. Tesla will pay this back with their taxes (etc) within a few years.

qeternity 5y ago
> Money well spent in my opinion. Tesla will pay this back with their taxes (etc) within a few years. How do you arrive at this conclusion?
- ChemSpider 5y ago
  The Tesla Berlin car factory alone costs 4 billion euros. A large part of this sum is going to local construction companies. So in some sense, they already paid for it.
  - qeternity 5y ago
    What? That’s not how this works. If the government gives me €1B and I go buy gold with it, just because I’ve spent it locally does not make it a productive use of proceeds.
    - epistasis 5y ago
      That's because you bought gold rather than purchasing productive aspects of the economy, which goes back to labor. Buying up stores of wealth instead of purchasing services is a very bad way to stimulate the economy.
      - qeternity 5y ago
        You’ve missed the point entirely, as that is precisely my point. Merely hand waving it away and saying “it was spent on local construction companies” is not a sufficient argument. It takes a hell of a lot to justify these sorts of investments and usually the ROI doesn’t materialize for the State.
        nickflood 5y ago
        What the other person meant, I think, is that when you buy services from the companies, those companies then pay a 20% tax on profit to the state, additionally, all the salaries they pay to people also end up ta ed at 30-40%, so much of the labor cost will be returned to the state and only raw materials won't (but if they are sourced locally, the suppliers will also contribute some taxes). Don't know the exact division between labor and materials, but my armchair guess would be that 20% of the cost of factory will end up as tax paid to the state.
        laingc 5y ago
        I think GP is prefectly well aware of what was meant, and their point still stands - you need to do a lot of careful analysis to actually claim any ROI for these kinds of government handouts, and the burden of proof is very firmly on those claiming the benefits. The history of these things is overwhelmingly that in the final tally, actual benefits fall far short of break even.
        ImprobableTruth 5y ago
        I don't feel comfortable with people just claiming that there's a positive ROI, but I feel the same about claiming "usually the ROI doesn’t materialize for the State" without anything to back it up. >The history of these things is overwhelmingly that in the final tally, actual benefits fall far short of break even. Do you have some source for this?
        qeternity 5y ago
        I know what they meant. That doesn’t mean you can just argue a point without any sort of justification.
        deleted 5y ago
        [deleted]
        ch_sm 5y ago
        To expand on your point, the "ROI" for a state doesn’t have to be strictly financial. It can invest to improve employment rate, to establish itself as a production/business hub, etc.
- Ecstatify 5y ago
  Wages Capital Investment Corporation Tax
  - qeternity 5y ago
    What sort of thesis is this? Does anyone bother to even do back of the envelop math anymore before having an opinion on something? I asked for something very specific for someone who expressed a very confident opinion.
    - Ecstatify 5y ago
      Did you even read the article? You don’t think a German government agency would do cost-benefit analysis on supporting a project ?! I think the benefits of FDI are pretty well established.
- didibus 5y ago
  You're right, a deeper analysis is probably required and hopefully was done. In general though, I think any investment that develops the means of production of a country is well spent. Having the capabilities and equipment is a huge long term boon I think. Like I'm not sure what else would money be better spent on then education towards a knowledgeable workforce and the means of production to produce and service people. Within that category, I agree there is an opportunity cost, like is battery manufacturing the right thing to invest in compared to other products or services? That's a much harder thing to predict though.
  - qeternity 5y ago
    > I think any investment that develops the means of production of a country is well spent. Hyperbole such as this is why we end up with so many bad policies. You can be pro-investment and also expect that governments focus on good investments. Not all investments are not good investments.
    - antonzabirko 5y ago
      Can you elaborate? Why are batteries a bad investment?
      - qeternity 5y ago
        Because investment theses aren’t as simple as “thing X is a good investment”. You don’t start with the assumption it’s a good investment and try to disprove it. You do the opposite, and with some sort of analysis. It’s not that batteries are good or bad. It’s whether this amount of capital invested in batteries with this company and this business plan at this cost of capital is a good investment.
    - didibus 5y ago
      It's not hyperbole, I've refined it down to a category of investment I'm saying should be prioritized. Now within that category I acknowledged that we should look at the opportunity cost and try to predict what would be a good investment, but that's not a science, you can only do so much analysis, eventually you need to decide and there's always a risk involved.
croes 5y ago
Successful companies need no funding, this money would be better used for charging infrastructure.
- jollybean 5y ago
  This is a good point and probably should not be downvoted. Telsa may not really have a problem with financing this, and subsidies might have a better impact where financing has structural problems - charging infrastructure has exactly that problem. The economics are not clear, and it's probably going to boil down to public investment. Moreover, the money might be more effectively distributed through Europe instead of being concentrated in one or two places. In short - let capitalism do capitalism and government do civic infrastructure.
jollybean 5y ago
The problem with this specific subsidy is that it will disproportionately benefit the already industrialized states. The economies most likely to take advantage of it are those with automotive foundations. Essentially, it's Spain funding Germany's leap ahead. Germany will import Polish Engineers and workers to support it - and those 'lost bodies' represent a hugely problematic issue for E. European economies. In addition to that, general free market access to E. European industry has resulted in more money exported to foreign owners of Polish industry than Poland receives in direct transfer subsidies. Particularly when combined with the essentially 'hard money' requirement of the currency union, which favours Germany, and you have serious problems. It's a thorny issue. I think this subsidy probably makes sense, but it should be on a national level, not EU level.
- daanlo 5y ago
  I don‘t know the proper solution, but building 27 ‚excellent clusters‘ for battery technology wouldn‘t make any sense. If it was national programmes then it would probably also be nationally funded and bigger economies (like Germany/Italy) would also have bigger budgets.
  - jollybean 5y ago
    The bigger economies have bigger budgets is just fine, and the investments would be proportional to size their respective automotive sectors. Sweden for example, has an outsized auto industry, but they can afford the investment. If the EU wants to do this, they should be building the factory in Spain. Failing that, France, Germany, Italy and possibly Sweden could each build their own, that would work an be 'fair'. The worst option would be to use EU money to centralize it in Germany, with a large cohort of foreign workers. It exemplifies the systematic centralization of wealth and power in Germany which is literally the opposite of what the EU is supposed to be doing. Since France has been ailing, and the UK is out, the very original objective of the project is now turned upside down.
    - panick21 5y ago
      > The worst option would be to use EU money to centralize it in Germany That not happening. > with a large cohort of foreign workers that is equally nonsense. You seem to be totally misunderstanding what going on here. Go and actually read about the strategy that is being followed.
barney54 5y ago
Ask New York about how things worked out at Gigafactory 2.
mytailorisrich 5y ago
Everyone is working on batteries and they are happening one way or another (and arguably they have already happened) because sales of new ICE cars will be banned starting in 2030. So the question is what would happen without this subsidy? Probably exactly what is already happening anyway, in which case this is a great windfall for Tesla (which is not even a German or EU company) but not really "money well spent". You could also argue that this is a good play by Germany, which has other EU states help reinforce their already dominant industrial position.
- panick21 5y ago
  Yes, Tesla would have build the plant there anyway most likely but saying 'it happens anyway' in a broader context is not clear, EU has made a strategic choice that battery are a high priority and that why they want to make it happen both faster, and broader. I'm not a fan of subsides like this, but if you are gone subsidies something then batteries are one of the best things. > Tesla (which is not even a German or EU company) The exact reason the EU lets other companies apply is because they want to have international investment in the EU from companies not from the EU. > which has other EU states help reinforce their already dominant industrial position. Every country that is spending in this program gets some return. The countries that got granted money are all over Europe.
splittingTimes 5y ago
A well tried and tested scheme by corporations. Company establishes a presence in a country, collects subsidies (payed by taxpayer money) under the pretence to later pay it back in taxes and employment. However, once the subsidies end, they move on to the next country. Having the taxpayer footing the bill. Rinse and repeat.
- panick21 5y ago
  This is mostly nonsense. Tesla is not spending a multiple billions more for a very complex, very expensive factory (far larger then just the battery factory), heir and train 1000s of employs, developing local supply lines only to move the whole factory. Specially because they specifically located the factory there to serve the local market. You are turning the exceptional case and pretending it is the usual case.
  - splittingTimes 5y ago
    With subsidies of 63 million dollars over a 10 year range Nokia build a huge plant in Germany, employed some 3200 people, had supply chains running, etc. The factory was profitable. However, once the 10y contract was over they closed the factory and relocated to Romania. And this was in a year where Nokia posted 7.2 billion in profits.. Same with afshion companies and car manufactures. https://www.ft.com/content/74ab02a6-fd85-11df-a049-00144feab49a https://www.ft.com/content/74ab02a6-fd85-11df-a049-00144feab...
    - panick21 5y ago
      > You are turning the exceptional case and pretending it is the usual case.
ukoki 5y ago
I can also see battery manufacture (and maybe chip manufacture) may become a "strategic asset" continuously support by subsidies, much like farming is.
peoplefromibiza 5y ago
> The funding is based on a very good EU initiative. Any battery manufacturer can apply: That's part of the reasons why the Italian minister for ecological transition, Cingolani, few days ago talked about rethinking the ban strategy on ICE engines, using the supercar market as an example of an European industry that would suffer from it. Italy wants to build their own batteries, in Europe Germany wants to build batteries in Germany, no matter who produces them The federal elections in Germany will be held at the end of this month (Sept. 2021) Frau Merkel will retire and Draghi could become the new strong political leader of Europe, partnering with Macron. We'll see if things are going to be the same or EU will change the rules around subsiding non EU companies. But it'll eventually happen after German elections, not before.
- allendoerfer 5y ago
  > The federal elections in Germany will be held at the end of this month (Sept. 2021) Frau Merkel will retire and Draghi could become the new strong political leader of Europe, partnering with Macron. That is a wild thesis. Merkel's power has very little to do with her personally, but with the biggest European economy she represents.
- panick21 5y ago
  > That's part of the reasons why the Italian minister for ecological transition, Cingolani, few days ago talked about rethinking the ban strategy on ICE engines, using the supercar market as an example of an European industry that would suffer from it. Because Italy has lost most of the other car market and is the only country in Europe that makes real money with supercars. Literally no other country outside of Italy would have this opinion. > Draghi could become the new strong political leader of Europe Yeah, sorry Italy will not take that position.

qeternity 5y ago

> Money well spent in my opinion. Tesla will pay this back with their taxes (etc) within a few years. How do you arrive at this conclusion?

ChemSpider 5y ago
The Tesla Berlin car factory alone costs 4 billion euros. A large part of this sum is going to local construction companies. So in some sense, they already paid for it.
- qeternity 5y ago
  What? That’s not how this works. If the government gives me €1B and I go buy gold with it, just because I’ve spent it locally does not make it a productive use of proceeds.
  - epistasis 5y ago
    That's because you bought gold rather than purchasing productive aspects of the economy, which goes back to labor. Buying up stores of wealth instead of purchasing services is a very bad way to stimulate the economy.
    - qeternity 5y ago
      You’ve missed the point entirely, as that is precisely my point. Merely hand waving it away and saying “it was spent on local construction companies” is not a sufficient argument. It takes a hell of a lot to justify these sorts of investments and usually the ROI doesn’t materialize for the State.
      - nickflood 5y ago
        What the other person meant, I think, is that when you buy services from the companies, those companies then pay a 20% tax on profit to the state, additionally, all the salaries they pay to people also end up ta ed at 30-40%, so much of the labor cost will be returned to the state and only raw materials won't (but if they are sourced locally, the suppliers will also contribute some taxes). Don't know the exact division between labor and materials, but my armchair guess would be that 20% of the cost of factory will end up as tax paid to the state.
        laingc 5y ago
        I think GP is prefectly well aware of what was meant, and their point still stands - you need to do a lot of careful analysis to actually claim any ROI for these kinds of government handouts, and the burden of proof is very firmly on those claiming the benefits. The history of these things is overwhelmingly that in the final tally, actual benefits fall far short of break even.
        ImprobableTruth 5y ago
        I don't feel comfortable with people just claiming that there's a positive ROI, but I feel the same about claiming "usually the ROI doesn’t materialize for the State" without anything to back it up. >The history of these things is overwhelmingly that in the final tally, actual benefits fall far short of break even. Do you have some source for this?
        qeternity 5y ago
        I know what they meant. That doesn’t mean you can just argue a point without any sort of justification.
        deleted 5y ago
        [deleted]
      - ch_sm 5y ago
        To expand on your point, the "ROI" for a state doesn’t have to be strictly financial. It can invest to improve employment rate, to establish itself as a production/business hub, etc.
Ecstatify 5y ago
Wages Capital Investment Corporation Tax
- qeternity 5y ago
  What sort of thesis is this? Does anyone bother to even do back of the envelop math anymore before having an opinion on something? I asked for something very specific for someone who expressed a very confident opinion.
  - Ecstatify 5y ago
    Did you even read the article? You don’t think a German government agency would do cost-benefit analysis on supporting a project ?! I think the benefits of FDI are pretty well established.
didibus 5y ago
You're right, a deeper analysis is probably required and hopefully was done. In general though, I think any investment that develops the means of production of a country is well spent. Having the capabilities and equipment is a huge long term boon I think. Like I'm not sure what else would money be better spent on then education towards a knowledgeable workforce and the means of production to produce and service people. Within that category, I agree there is an opportunity cost, like is battery manufacturing the right thing to invest in compared to other products or services? That's a much harder thing to predict though.
- qeternity 5y ago
  > I think any investment that develops the means of production of a country is well spent. Hyperbole such as this is why we end up with so many bad policies. You can be pro-investment and also expect that governments focus on good investments. Not all investments are not good investments.
  - antonzabirko 5y ago
    Can you elaborate? Why are batteries a bad investment?
    - qeternity 5y ago
      Because investment theses aren’t as simple as “thing X is a good investment”. You don’t start with the assumption it’s a good investment and try to disprove it. You do the opposite, and with some sort of analysis. It’s not that batteries are good or bad. It’s whether this amount of capital invested in batteries with this company and this business plan at this cost of capital is a good investment.
  - didibus 5y ago
    It's not hyperbole, I've refined it down to a category of investment I'm saying should be prioritized. Now within that category I acknowledged that we should look at the opportunity cost and try to predict what would be a good investment, but that's not a science, you can only do so much analysis, eventually you need to decide and there's always a risk involved.

croes 5y ago

Successful companies need no funding, this money would be better used for charging infrastructure.

jollybean 5y ago
This is a good point and probably should not be downvoted. Telsa may not really have a problem with financing this, and subsidies might have a better impact where financing has structural problems - charging infrastructure has exactly that problem. The economics are not clear, and it's probably going to boil down to public investment. Moreover, the money might be more effectively distributed through Europe instead of being concentrated in one or two places. In short - let capitalism do capitalism and government do civic infrastructure.

jollybean 5y ago

The problem with this specific subsidy is that it will disproportionately benefit the already industrialized states. The economies most likely to take advantage of it are those with automotive foundations. Essentially, it's Spain funding Germany's leap ahead. Germany will import Polish Engineers and workers to support it - and those 'lost bodies' represent a hugely problematic issue for E. European economies. In addition to that, general free market access to E. European industry has resulted in more money exported to foreign owners of Polish industry than Poland receives in direct transfer subsidies. Particularly when combined with the essentially 'hard money' requirement of the currency union, which favours Germany, and you have serious problems. It's a thorny issue. I think this subsidy probably makes sense, but it should be on a national level, not EU level.

daanlo 5y ago
I don‘t know the proper solution, but building 27 ‚excellent clusters‘ for battery technology wouldn‘t make any sense. If it was national programmes then it would probably also be nationally funded and bigger economies (like Germany/Italy) would also have bigger budgets.
- jollybean 5y ago
  The bigger economies have bigger budgets is just fine, and the investments would be proportional to size their respective automotive sectors. Sweden for example, has an outsized auto industry, but they can afford the investment. If the EU wants to do this, they should be building the factory in Spain. Failing that, France, Germany, Italy and possibly Sweden could each build their own, that would work an be 'fair'. The worst option would be to use EU money to centralize it in Germany, with a large cohort of foreign workers. It exemplifies the systematic centralization of wealth and power in Germany which is literally the opposite of what the EU is supposed to be doing. Since France has been ailing, and the UK is out, the very original objective of the project is now turned upside down.
  - panick21 5y ago
    > The worst option would be to use EU money to centralize it in Germany That not happening. > with a large cohort of foreign workers that is equally nonsense. You seem to be totally misunderstanding what going on here. Go and actually read about the strategy that is being followed.

barney54 5y ago

Ask New York about how things worked out at Gigafactory 2.

mytailorisrich 5y ago

Everyone is working on batteries and they are happening one way or another (and arguably they have already happened) because sales of new ICE cars will be banned starting in 2030. So the question is what would happen without this subsidy? Probably exactly what is already happening anyway, in which case this is a great windfall for Tesla (which is not even a German or EU company) but not really "money well spent". You could also argue that this is a good play by Germany, which has other EU states help reinforce their already dominant industrial position.

panick21 5y ago
Yes, Tesla would have build the plant there anyway most likely but saying 'it happens anyway' in a broader context is not clear, EU has made a strategic choice that battery are a high priority and that why they want to make it happen both faster, and broader. I'm not a fan of subsides like this, but if you are gone subsidies something then batteries are one of the best things. > Tesla (which is not even a German or EU company) The exact reason the EU lets other companies apply is because they want to have international investment in the EU from companies not from the EU. > which has other EU states help reinforce their already dominant industrial position. Every country that is spending in this program gets some return. The countries that got granted money are all over Europe.

splittingTimes 5y ago

A well tried and tested scheme by corporations. Company establishes a presence in a country, collects subsidies (payed by taxpayer money) under the pretence to later pay it back in taxes and employment. However, once the subsidies end, they move on to the next country. Having the taxpayer footing the bill. Rinse and repeat.

panick21 5y ago
This is mostly nonsense. Tesla is not spending a multiple billions more for a very complex, very expensive factory (far larger then just the battery factory), heir and train 1000s of employs, developing local supply lines only to move the whole factory. Specially because they specifically located the factory there to serve the local market. You are turning the exceptional case and pretending it is the usual case.
- splittingTimes 5y ago
  With subsidies of 63 million dollars over a 10 year range Nokia build a huge plant in Germany, employed some 3200 people, had supply chains running, etc. The factory was profitable. However, once the 10y contract was over they closed the factory and relocated to Romania. And this was in a year where Nokia posted 7.2 billion in profits.. Same with afshion companies and car manufactures. https://www.ft.com/content/74ab02a6-fd85-11df-a049-00144feab49a https://www.ft.com/content/74ab02a6-fd85-11df-a049-00144feab...
  - panick21 5y ago
    > You are turning the exceptional case and pretending it is the usual case.

ukoki 5y ago

I can also see battery manufacture (and maybe chip manufacture) may become a "strategic asset" continuously support by subsidies, much like farming is.

peoplefromibiza 5y ago

> The funding is based on a very good EU initiative. Any battery manufacturer can apply: That's part of the reasons why the Italian minister for ecological transition, Cingolani, few days ago talked about rethinking the ban strategy on ICE engines, using the supercar market as an example of an European industry that would suffer from it. Italy wants to build their own batteries, in Europe Germany wants to build batteries in Germany, no matter who produces them The federal elections in Germany will be held at the end of this month (Sept. 2021) Frau Merkel will retire and Draghi could become the new strong political leader of Europe, partnering with Macron. We'll see if things are going to be the same or EU will change the rules around subsiding non EU companies. But it'll eventually happen after German elections, not before.

allendoerfer 5y ago
> The federal elections in Germany will be held at the end of this month (Sept. 2021) Frau Merkel will retire and Draghi could become the new strong political leader of Europe, partnering with Macron. That is a wild thesis. Merkel's power has very little to do with her personally, but with the biggest European economy she represents.
panick21 5y ago
> That's part of the reasons why the Italian minister for ecological transition, Cingolani, few days ago talked about rethinking the ban strategy on ICE engines, using the supercar market as an example of an European industry that would suffer from it. Because Italy has lost most of the other car market and is the only country in Europe that makes real money with supercars. Literally no other country outside of Italy would have this opinion. > Draghi could become the new strong political leader of Europe Yeah, sorry Italy will not take that position.