Tesla has begun assembling battery systems at its plant in Germany, but will focus cell production in the United States in light of the Inflation Reduction Act’s tax incentives, a spokesman said Wednesday.

The U.S. electric vehicle maker is also preparing to produce cell components, such as electrodes, some of which will be shipped from its Gruenheide plant in Brandenburg state to the United States, the spokesman said.

In the “near future,” cars produced in Brandenburg will contain locally assembled batteries, the Tesla spokesman added.

“Tesla’s cell production center is currently in the United States due to the framework created by the American Inflation Reduction Act (IRA),” he said in a written statement.

European Union leaders have expressed concern that local content requirements for much of the IRA’s $369 billion grant could encourage companies to leave Europe for the United States.

The European Commission has proposed relaxing rules on state aid for investments in renewable energy, decarbonisation of industry, hydrogen or zero-emission vehicles, although Germany’s economy minister warned that Europe should not respond to US law with excessive subsidies.