Tesla isn’t the only corporation reconsidering its European investments in the aftermath of Biden’s Inflation Reduction Act.

Tesla recently declared a shift in strategy away from Europe in order to capitalize on unparalleled subsidies in the United States. Yet, it is not the only corporation considering investment options in relation to Europe.

Numerous multinational corporations are reconsidering plans to invest additional funds in Europe. It comes after US President Joe Biden announced the Inflation Reduction Act, or IRA, last year, which includes a record $369 billion in climate and energy policy investment.

The groundbreaking legislation, which includes green industry incentives, has sparked competitiveness concerns for European firms – and irritated regional politicians. Brussels has been left to determine how to effectively respond.

Northvolt, a Swedish battery manufacturer; Linde, a German chemical giant; Volkswagen, the carmaker; and Enel, an Italian energy powerhouse, have all shown an interest in profiting from US subsidies. And there may be more.

“European companies would rather have the present of the US government than the punishment of the European authorities,” Evangelos Mytilineos, CEO and chairman of the Greek industrial giant Mytilineos, said on CNBC’s “Squawk Box Europe” concerning the increased bureaucracy in Europe.

When asked if he would be taking his business to the U.S., Mytilineos answered, “That is a possibility. Regrettably, that is not a viable option for our organization.”

It is too early to tell how much investment will leave Europe as a result of Biden’s approach. Yet, so far, the message from European firms is clear: they want regional governments to do more to help them.

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“Europe needs to improve its game,” said Miguel Stillwell D’Andrade, CEO of energy conglomerate EDP, on CNBC’s Squawk Box Europe on Friday. He referred to the IRA as a “very powerful, straightforward pro-business investment vehicle.”

Ursula von der Leyen, President of the European Commission, stated in February that it was time for a “simpler and speedier framework.” Before, her staff had praised initiatives in the United States to create a cleaner economy, while also intensifying discussions with their colleagues to ensure that European enterprises did not flee to America.

But, there are concerns that it will be too little, too late.

Northvolt CEO Peter Carlsson told CNBC in February that his company has been working on a North American factory. “And with the IRA, that plan kind [of] became turbo-charged due to the very significant incentives,” he added.

Northvolt is debating whether to proceed with its expansion in North America before doing so in Germany.

Nevertheless, in January, Ilham Kadri, CEO of Solvay, a Belgian chemicals business, stated, “The fact is that the Biden administration incentivizes when Europe regulates – to put it black in white.”

The EU is “conscious that more has to be done.”

Tesla decided last month to reduce some investments in Germany and instead focus on the North American market to take advantage of the IRA.

According to Reuters, “the focus of Tesla’s cell production is now in the United States due to the framework set by the United States Inflation Reduction Act (IRA),” the company said on Feb. 22. When CNBC reached out to the company on Thursday, no one was accessible.

It comes as both corporations and analysts argue that the IRA’s simplicity is too appealing to pass up.

“First and foremost, the IRA is built in a very simple manner. And simplicity is always a good thing. The European Union machinery, on the other hand, is far more complex,” said Maria Demertzis, a senior fellow at the think tank Bruegel.

“Would enterprises in the European Union or elsewhere postpone investment that they meant to undertake in the European Union in order to profit from the IRA’s direct, straightforward, and immediate benefit?”

It’s a concern for European officials, she says, and it comes at a very difficult time.


EU economies cannot afford to lose major investments as they grapple with a cost-of-living problem. The bloc also wishes to be self-sufficient in essential resources like lithium.

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“The EU is acutely aware that it must do more to compete on a global scale,” Demertzis added.

The European Commission, the EU’s executive arm, is still working on a Sovereignty Fund to finance green projects, but complete details are not expected until June.

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