Tesla still in talks for German battery fab

German Vice Chancellor Sigmar Gabriel said on Tuesday that the government was in talks with Tesla about building a battery factory in Germany.

Tesla CEO Elon Musk is in contact with German officials and may be looking to secure state support for the project, according to Bloomberg, which cited comments made by Gabriel at an event at a Mercedes-Benz factory in Gaggenau, Germany.

While a Tesla spokeswoman told Bloomberg that there were “no current plans to build a battery factory in Germany,” Musk said last year that he expected Tesla to have a battery factory in Germany in the next few years.

Gabriel, who also serves as minister for Economic Affairs and Energy, did not offer any details about the discussions with Tesla but did call on greater cooperation among automakers in the production of the next generation of batteries for electric vehicles. He added that it would make sense to look beyond Germany to possible partners in France or Italy. Only through such international partnerships would it be possible to develop next-generation technology in Europe, he said.

Under immense pressure to clean up its act amidst the ongoing emissions scandal, Volkswagen is building a new all-electric platform for small and medium cars across all its major brands. With Asian manufacturers dominating battery production, there is also growing pressure for VW to partner with BMW and Daimler on battery technology. While VW execs have signalled their readiness to partner with fellow German automakers on batteries, Daimler is not interested.

The company is shutting down its battery cell production in Germany this year. Daimler said last year that demand was too low to make cell production economical, particularly in view of much bigger rivals like LG Chem, which will provide Daimler’s battery cells in the future.

The VW emissions scandal appears to be having a major impact on electric vehicle production. In an interview with German financial daily Handelsblatt, Scott Keogh, president of Audi of America, said the scandal would likely “accelerate the process,” adding that it was “positively motivating” Audi in its own development of electric cars.