Tesla Motors Talking To German Government About Battery Factory: UPDATED

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Rendering of Tesla battery gigafactory outside Reno, Nevada, Sep 2014

Rendering of Tesla battery gigafactory outside Reno, Nevada, Sep 2014

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Well, here's one that ought to irk the German automakers.

Silicon Valley electric-car maker Tesla Motors is reportedly in talks with the German government to establish a lithium-ion battery plant in that country, which could kickstart slow sales of its Model S and future vehicles.

And as is usual in cases of new industrial facilities, Tesla will expect some level of subsidy from the country's coffers.

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As reported this morning by Bloomberg, the confirmation of talks between the government and the carmaker came from the German economy minister, Sigmar Gabriel.

Elon Musk, Tesla's CEO, has been personally involved in the talks, Gabriel told reporters.

[UPDATE: A later version of the Bloomberg story added a statement from Kathrin Schira, a Tesla spokesperson in Munich, that the company has “no current plans to build a battery factory in Germany." The article noted that Schira's statement did not comment on whether or not the company was talking with the German government. Tesla communications staff in California specifically requested that the statement be added to this Green Car Reports story.]

2015 Tesla Model S 70D in new Ocean Blue color

2015 Tesla Model S 70D in new Ocean Blue color

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Ironically, Gabriel made the comment yesterday during a media event at a Mercedes-Benz car factory in Rastatt, Germany.

Of the three large German automaking groups--BMW, Daimler, and Volkswagen--that company has been least forward in laying out plans to offer battery-electric vehicles that would compete with Tesla.

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Like Audi and BMW, Mercedes plans to offer plug-in hybrid versions of many existing models by 2020. But a pure electric Tesla competitor from Mercedes still appears to be many years off.

BMW has had its i3 electric car, including an optional range-extended version, on the market for about two years.

Tesla Model S taken to top speed on a German Autobahn

Tesla Model S taken to top speed on a German Autobahn

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Audi showed its e-Tron Quattro Concept for a battery-electric crossover utility vehicle that should arrive sometime in 2017 or 2018, and is expected to compete with the Tesla Model X crossover that's now in limited production.

While the emergence of Tesla and its success in selling expensive, long-range pure electric cars was a huge shock to the German prestige brands, Tesla sales in Germany have remained relatively modest.

MORE: How Audi, BMW & Mercedes Plan To Compete With Tesla--And Why (Dec 2014)

The proposed battery plant--for which, Gabriel said, "I assume [Musk] will want public funds"--may not be intended to supply electric cars at all, however.

With high electric rates due to a phaseout of nuclear power and a determined push into renewable energy, Germany is one of the markets Tesla has identified as prime territory for its home-energy storage products.

Tesla Powerwall Home Battery

Tesla Powerwall Home Battery

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The company's massive Gigafactory cell and battery plant outside Reno, Nevada, is expected to open next year.

Musk has said demand for the company's Powerwall far exceeds the company's expectations, and that Tesla will need more cell plants of the same scale to supply both its cars and its energy-storage products.

Perhaps Germans will store renewably-generated energy in Tesla Powerwall units with locally made lithium-ion cells--even as they wait for their domestic makers to come up with all-electric cars that match Tesla.

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