The US carmaker had originally planned to produce the full battery at the Gruenheide site in Germany, with a peak capacity of over 50 gigawatt hours per year.

But with the US offering electric vehicle makers sourcing batteries from within the US tax breaks and consumer discounts, the company has changed course.

“Tesla has started its battery system production in Gruenheide and is preparing to manufacture battery cell components. The company has prioritised further production steps in the USA because tax incentives make business conditions more favorable there,” the Brandenburg economy ministry said in a statement.

Tesla did not respond to requests for comment.

Chief Executive Elon Musk said in March 2022 that the battery plant would reach volume production by the end of 2023, but the plant and car production site have hit their targets later than planned.

In 2020, Musk said the Berlin gigafactory would be the biggest battery factory in the world.

Tesla has struggled to ramp up production of the 4680 battery cell at its factories in Fremont, California, and Austin, Texas, which experts have attributed to new and unproven techniques the company has been having trouble scaling up.

It announced in late January it would invest more than US$3.6 billion to expand its Nevada gigafactory complex with two new factories, one to mass produce its long-delayed Semi electric truck and the other to make its new 4680 battery cell.