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Tesla Expects Decision on €1B in German Subsidies, TSLA Stock Looks Set to Rise

UTC by Tolu Ajiboye · 3 min read
Tesla Expects Decision on €1B in German Subsidies, TSLA Stock Looks Set to Rise
Photo: Unsplash

The German subsidies would help Tesla with €1 Billion of the €5 Billion it intends to invest in the gigafactory at Gruenheide.

Tesla Inc (NASDAQ: TSLA) is waiting on a decision from the German government regarding proposed subsidies for the automakers and may receive one by end of the year. The Elon Musk-led company is planning to establish a battery cell factory in Berlin, according to reports. In January, the European Union approved a plan that would grant state aid to certain car manufacturers. This is in a bid to foster the production of batteries for electric vehicles and reduce import reliance on China.

The beneficiaries of these state subsidies include Tesla, BMW, and others. The overall value of the subsidies scheme, dubbed the European Battery Innovation Project, is 2.9 billion euros ($3.45 billion). It is a follow-up to the 2017 European Battery Alliance launch which looks to facilitate the industry’s shift toward fossil fuels.

Tesla stands to receive about 1 billion euros ($1.2 billion) in public funding from Germany. The American electric vehicle company plans to invest 5 billion euros in its aforementioned battery cell factory in Gruenheide, a municipality close to Berlin. According to the German economy ministry’s spokesperson, there will be a final decision on the deal before the end of the year. The spokesperson further pointed out that there is currently no final sum because Tesla and the European Commission were still in talks.

Tesla’s CEO, Elon Musk, said last month that the company hopes to produce its first ‘Gruenheide’ cars as early as October. Before now, the company faced regulatory hurdles that forced it to push the planned gigafactory opening into late 2021. In addition, the plant faced local resistance over environmental concerns.

Tesla Stock Price Projected to Rise amid German Subsidies Scheme

Tesla’s stock price is projected to rise amid these upcoming developments. Currently, at $733, some analysts already estimate a $3,000 value, a sentiment Elon Musk welcomes. Cathie Wood of Ark Investment says Tesla share price may rise by 300% from its current level.

Wood bases this estimate on the car company selling between 5 to 10 million vehicles no later than 2025. In addition, she states that Tesla will find success with a planned autonomous ride-hailing network. The proposed service, known as Tesla Network, will make a lot of money for Tesla, with a high margin. Elon Musk shares Cathie Woods’ optimism and says Tesla could indeed be worth $3,000 a share “if they execute really well”. 

If Tesla hits $3,000, it would put the electric car’s valuation at $3 trillion. This would make it the most valuable company in the world. Presently though, Tesla holds the title of most valuable automotive company in the world at over $730 billion.

Musk usually keeps his followers on Twitter up to date on TSLA stock price. However, some company investors found the CEO’s tweets to be “erratic” and sued him. The resultant effect was an over $13 billion dollar loss in market value for the company. 

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Tolu Ajiboye
Author Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

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