By 
Tesla Inc.
TSLA,
+0.32%
is pausing its plans to make battery cells in Germany as it looks at qualifying for U.S. electric vehicle and battery manufacturing tax credits, people familiar with the matter said.
The company, which has been working to produce its own batteries, has discussed shipping cell-making equipment it had intended to use at its Berlin-area factory to the U.S., the people said.
Making more batteries domestically could help Tesla qualify for additional tax breaks available under the Inflation Reduction Act, also known as the IRA, which President Biden signed into law last month.
The law provides production tax credits that could offset more than a third of the cost of EV battery packs, analysts say—so long as the rechargeable cells are made and packaged in the U.S. It also extends a $7,500 tax credit available to buyers of certain EVs whose batteries meet various sourcing requirements.
Tesla’s move reflects how the new U.S. law is reshaping the EV industry, accelerating the race to secure domestic supplies of battery cells and related ingredients.
An expanded version of this story appears at WSJ.com.
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