Tesla is shifting its battery cell production capacity from Germany to the US as it expects that it is going to be more useful there, giving the automaker’s buyers access to the $7,500 federal tax credit.

For the last three years, Tesla has been working to build its battery cells with a new 4680 format. The plan is critical to the company’s long-term growth as it powers its next generation of electric vehicles using a new structural battery pack architecture.

Tesla is currently building the cells at its pilot plant in Fremont, California, but the automaker is deploying larger-scale cell production at Gigafactory Texas and Gigafactory Berlin.

Last year, we heard that Tesla was running into issues building battery cells at Gigafactory Berlin and was considering moving battery production equipment to the US.

The information came as we learned that to get the full $7,500 federal tax credit, automakers will need to source their battery cells from North America.

Therefore, it makes sense for Tesla to focus its attention on ramping up battery production at Gigafactory Texas over Gigafactory Berlin since it will have a bigger impact there.

Now the Brandenburg economy ministry issued a statement confirming that Tesla is starting to produce battery cell components, but it is holding off on full cell production because it is prioritizing US production:

Tesla has started its battery system production in Gruenheide and is preparing to manufacture battery cell components. The company has prioritized further production steps in the USA because tax incentives make business conditions more favorable there.

Tesla has recently confirmed that it is making progress toward ramping up production of its new 4680 battery cell at Gigafactory Texas.

The cells are going to be used to increase production of the Model Y at the factory and launch the new Cybertruck later this year.