German government wants to support Tesla battery cell plant with 1.14B euros
news.in-24.com
news.in-24.com
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.
How do you arrive at this conclusion?
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.
Buying up stores of wealth instead of purchasing services is a very bad way to stimulate the economy.
It takes a hell of a lot to justify these sorts of investments and usually the ROI doesn’t materialize for the State.
That doesn’t mean you can just argue a point without any sort of justification.
>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?
Capital Investment
Corporation Tax
I asked for something very specific for someone who expressed a very confident opinion.
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.
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.
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.
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.
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.
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.
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.
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.
The only actual point made (ad nauseum) was that 'Germany contributes a surplus to the EU' - which is common knowledge.
You've lost the gambit if you can't make a point and only resort to name calling, you're only making yourself look bad.
The very fact that a mutlibillion dollar EU subsidy is going to Germany, ahead of less developed economies is a hint of evidence of consolidation in Germany.
The battery subsidy makes up more than 10% of the 'transfer imbalance' paid out to Germany to the EU, so it's fairly significant.
But the greater theme of centralization of power in Germany is obviously happening, it's not even controversial.
"The country’s outsized economic clout has made Berlin Europe’s political fulcrum, " [1]
Given a weak France and absent UK, Chanceller Merkel has the 'final word' on all important issues. She appointed a unelected and unknown member of her own political party to the President of the EU Commission as a pretty good example of that.
GDP per capita in Germany, France, Italy and Spain since 1990 [2] quite clearly demonstrates how after the introduction of the Euro, beyond a small bump of financial euphoria, that the Euro has considerably favoured Germany over those countries.
Absent any control over monetary policy, Spaniards etc. are left in the lurch and there's no reason to believe they will ever get out.
They are held in a financial straight jacket.
The few billion pounds they receive in EU subsidies are worthless next to to the existential harm to their economy. They are being turned into a Poland, with much of their talent leaving -> for Germany.
"Spaniards move to Germany in record numbers last year" [3]
The EU is beginning to look like what would happen if all of the Americas i.e. USA, Canada, Mexico, Brazil, Colombia formed a 'Federal Superstate' - there would be massive consolidation of power in the US via acquisition, talent migration etc..
"Germany is Doomed to Lead Europe [4]
The mechanisms of the trend are still debatable, but that it's happening is obvious.
[1] https://www.politico.eu/article/eurozone-problem-country-ger...
[2] https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?end=2...
[3] "https://english.elpais.com/elpais/2013/05/07/inenglish/13679...
[4] https://www.economist.com/europe/2020/06/25/germany-is-doome...
Most European institutions are designed by dolling out as much as they get in. That is the inherent way most of these programs work.
Had Britain been part of it, a lot of those factories would be in Britain.
> considerably favoured Germany over those countries
Because Germany has better policy and better discipline. The Euro was a project essentially pushed on the Germans, if the French were to stupid to see this outcome then its their own fault. In fact, French economics have been obsessed with fixed exchange rate regimens for 200 years no matter how many times its proven to be idiotic.
Btw, France and Spain are free to leave the EU and the Eurozone. Its was their choice to join and its their choice to leave.
I have not argued against the claim that the EU or the Eurozone is not beneficial to German. Rather that in this program support is given to a large number of companies all over Europe and is not inherently centralized on Germany beyond what is appropriate with how it is financed.
You have not provided any defense of evidence that everybody of Tesla will be foreign worker either.
No it is not. Germany is by far the biggest net payer, while Spain is a net receiver of EU funds. It is Germany getting a share of its own funding.
https://www.statista.com/chart/18794/net-contributors-to-eu-...
You can argue all day about the Euro or the market benefitting Germany and how Spain was hit hard by the financial crisis. But EU budget wise the claims you are making are not only false, but exactly the opposite.
But that's moot: the program is paid for by EU members and yet will benefit Germany first, which is not ideal.
2) "But EU budget wise the claims you are making are not only false, but exactly the opposite. "
This makes no sense at all.
"The EU has a budget therefore you are wrong" is not an argument.
> This makes no sense at all.
Let me rephrase: You are saying Spain is paying for investments in Germany. Not only is Spain not paying for investments in Germany, Spain is receiving money from the EU. It gets paid more out of the EU budget than it is putting into it.
Germany on the other hand pays way more money into the EU budget than it receives.
So you are not only slightly wrong, but the absolute opposite of what you are writing is true: Germany effectively invests into Spain through the EU. It can be easily googled so I do not know why you would even write something like this.
I just added the fact that Germany is of course still profitting from the EU, which is way it pays more into programs described in the article than it receives from them. Mabye I phrased that a bit convoluted.
> 1) There are many countries which are 'net investors' in the EU which will have less of an opportunity to leverage this money than Germany and thus, end up funding Germany.
You might have a point here. The statistic I posted is from 2018, so we will see how this will play out. It could be that Germany's net payments will be smaller. We will just have to wait to see the actual numbers. The net payment surplus of Germany is way bigger than the program though, so it will not turn negative. Germany will still pay for investments into other countries and not receive money from other EU members.
A quick googling showed, that Finland (net payer), Belgium (net receiver), Poland (giant net receiver), Italy (net payer), France (net payer) and Sweden (net payer) are also receiving money out of the program.
> But that's moot: the program is paid for by EU members and yet will benefit Germany first, which is not ideal.
Again: Germany pays more into the EU budget than all other members. Since it is the biggest net-payer it receive less than it pays. What you are writing is just wrong. Just look at the numbers.
If this was some evil German plan to get money out of the EU, the most effective way for Germany would be to just pay less into the EU budget in the first place and just pay the grants out nationally instead.
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.
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.
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.
Same with afshion companies and car manufactures.
https://www.ft.com/content/74ab02a6-fd85-11df-a049-00144feab...
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.
That is a wild thesis. Merkel's power has very little to do with her personally, but with the biggest European economy she represents.
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.
OTOH, it seems likely the jobs would be created there without this payment, so why do it?
If the 2000 jobs are Fraunhofer/Max Planck Institute battery chemistry researchers and engineers, than this is great news and will help developing a solid industrial battery base in Germany. Well done!
If the 2000 jobs are Gabelstaplerfahrer, and all the tech / research is done in the US, then yeah, the investment is mostly in the construction/services sector, which doesn't seem great.
This is oversimplified, but my guess is that Tesla doesn't want to outsource the core tech/research, so we're going to see more Gabelstaplerfahrer and less Fraunhofer/MPI.
Researching is not the only work that requires more then manual labor.
Go look at Nevada, after the Gigafactory there are now a number of battery companies located there.
Notability Germany wants to build technological independence, and I imagine part of that is becoming world leaders in battery manufacturing. Even if they don’t end up with Tesla IP, the knowledge that ends up in peoples heads and eventually spreads around the German economy will be incredibly valuable.
Given the EU ban on ICE cars in the near future, and the size Germany’s car manufacturing industry, it makes perfect sense for the German government to spend potential very large sums of money to make sure the next generation of cars is built in Germany. Not just ensuring their automotive industry keeps going, but also make it harder for other economies to compete by ensuring the majority of the manufacturing expertise world wide lives in German brains.
It’s also a strategic advantage to build battery manufacturing capacity domestically.
There are big advantages to keeping this somewhat local. Shipping batteries over seas or cross continent, after the raw materials have also been shopped long distances, will likely be economically inefficient.
You know what is heavy and relatively cheap? Steel. Yet we ship it all around.
A Tesla S battery is reported to weight 544kg and costs an estimated 15000 USD. That gives us 0.04 kg/USD.
For steel one estimate gives us that 1000kg goes for 1100 USD. Which gives us 0.9 kg/USD.
I thought maybe i’m missing your point so I did the same calculation for something light and expensive we are shipping around too.
One can buy 0.49kg ipad for 440 USD. Which gives us 0.001 kg/USD.
So batteries are somewhere between steel and ipads in terms of kg/$. Can you explain what makes both of those ends shipable while batteries won’t be?
The Tesla factory is controversial not just because of the funding it gets but also because of the environmental damage to the environment (and starting construction work without receiving a permit): https://www.reuters.com/article/us-tesla-gigafactory-germany...
Don't plant seeds in your own people
Import foreign plants, better, let your own seeds rot
*The C stands for Christianity, but it might just as well stand for Corruption. Would be a lot more accurate too.
But the case of Andreas Scheuer let's me doubt the effectiveness of such a thing: Everybody knows about the 500 million € he wasted, but since the party is just not affected by it in polls, it does not care and nothing happens.
To make use of it for further analysis, some meta-data and normalisation would be helpful, e.g. whether someone received media allegations about corruption versus someone was actually fined.
The result could be used by journalists to generate infographics, and to select and slice-and-dice data for better reporting. At the moment, reporting is mostly on single incidents; only occasionally, at the end of articles, related incidents are mentioned. Systemic issues (e.g. regular political corruption in a party) require more long-term data gathering, which journalists rarely take the time for, and such a data-set could be very useful background material for it.
The Berlin Brandenburg Airport took 25+ years to get build, 14+ YEARS of construction. So germaney often does take it's time. Project costs went from $2.xB to something like $10B plus.
Telsa is a private company, so probably can't afford overruns in time / cost of this nature (ie, 10 years later to open the factory, $8B over budget etc. Germany also seems eager to maybe balance some of the things that make everything go slow with getting something done.
Using this airport as an example of “it takes time in Germany” is a mistake. This airport is an example of how the German system may fail and is a laughing case for everyone in Germany: https://en.m.wikipedia.org/wiki/Berlin_Brandenburg_Airport, History section has all the details.