Battery makers, which once considered Germany, Europe’s top car producer, as a hot spot for building their manufacturing sites, have started to consider moving their production to the United States, thanks to the Inflation Reduction Act (IRA), which is poised to give tax credits to domestically produced electric vehicles (EVs) and EV parts. Swedish battery startup Northvolt’s CEO Carlsson said that under the IRA, the company would receive almost $840 million in subsidies for making batteries in the U.S. He said that was four times what Germany was offering, with cheaper energy prices in the U.S. on top. As a result, Northvolt is considering delaying its plans to construct a plant in Germany.

“We are now at a point where we may prioritise expansion in the U.S. over Europe first,” said Carlsson.

Carlsson’s sentiment was echoed by other executives as well. The $430 billion IRA, signed by Biden into law in August, has started to attract investors in green technology away from Europe.

The act introduces tax credits related to investment in green technology, plus tax breaks for consumers buying an electric vehicle or other green product made in North America.

One of the new legislation’s biggest victims is set to be German carmakers and suppliers, for which the United States is a main export market.

An October survey by the German Chambers of Commerce and Industry (DIHK) showed 39% of companies wanted to increase investment in the United States compared with 32% for Europe.

DIHK said there has already been increased investment in the U.S., particularly from the automotive industry.

“If we don’t do anything, a lot will emerge in the United States,” Siemens Energy Chief Executive Bruch said. “The risk of migration is there.”

German Economy Minister Habeck also voiced his concern, saying there was danger that “the next wave of technological innovation does not take place in Europe” – innovation key to helping Europe exit its energy crisis.

Habeck and his French counterpart Le Maire last week urged a strong European response to the IRA, which they said violates World Trade Organization (WTO) rules.

No country has yet officially launched a legal challenge against the IRA with the WTO, although both China and Russia raised concerns about it.

Europe and the U.S. continue their discussions on possible reversing parts of the legislation or looking for exemptions similar to those for Mexico and Canada.

In his visit to Washington this week, French President Macron will try to convince the Biden administration that it is not in its interests to weaken European companies at a time when they are facing intense competition from China.

The matter is expected to be addressed at a meeting of the EU-U.S. Trade and Technology Council on Dec. 5.

In Germany, criticism of European complacency and calls to introduce measures to boost competitiveness is growing.

“Quicker decisions (on projects), subsidies … other financial support for companies” are some possible solutions, Habeck said.

Habeck pointed out that Europe has its own large subsidies available for investment in green technology. But the problem is implementing them in a timely manner and obtaining the necessary permits from local and national authorities, he said.

“We were going to have to change our industrial policy anyhow as we are under enormous time pressure,” Habeck said. “We cannot afford construction times of 12 years for a hydrogen plant.”

Volkswagen Passenger Cars CEO Schäfer accused the European Union on Monday of “sticking to outdated and bureaucratic state aid rules that promote regions rather than preserving and transforming entire industrial sites”.

“The EU urgently needs new instruments to avert insidious de-industrialization,” Schäfer said. “We have no time to lose.”