Tesla recently announced a strategy shift away from Europe as it seeks to capitalize on unprecedented subsidies in the United States. But it’s not the only company reviewing investment decisions related to Europe.

Many multinationals are reconsidering plans to deploy new money in Europe. It comes after US President Joe Biden presented the Inflation Reduction Act or the IRA last year, which includes a record $369 billion in spending on climate and energy policies.

The groundbreaking legislation, which includes green subsidies for businesses, has raised competition issues for European companies and upset politicians in the region. Brussels needs to think about how best to respond.

Northvolt, a Swedish battery manufacturer; Linde, a chemical giant from Germany; Volkswagen, the car manufacturer; Enel, the Italian energy giant, have all expressed interest in taking advantage of US subsidies. And there may be more.

“European companies would rather have the gift of the US government than the punishment of the European authorities,” Evangelos Mytilineos, CEO and chairman of Greek industrial conglomerate Mytilineos, told CNBC’s “Squawk Box Europe” about the extra bureaucracy in Europe. .

When asked if he would bring his company to the US, Mytilineos replied, “It’s a possibility. Unfortunately, it’s not just a possibility for our company.”

It is still early to assess how much investment could flow out of Europe as a result of Biden’s policies. But so far the message from European companies is clear: they want officials in the region to do more to support them.

“Europe needs to step up its game,” said Miguel Stillwell D’Andrade, CEO of energy giant EDPtold CNBC’s Squawk Box Europe Friday. He described the IRA as an “extremely powerful, simple pro-business investment tool.”

In a speech in February, Ursula von der Leyen, President of the European Commission, said it was time for a “simpler and faster framework”. Previously, her team had welcomed the United States’ efforts for a cleaner economy, while intensifying talks with their counterparts to ensure that European companies do not flock to America.

But there are fears that it could be too little, too late.

Peter Carlsson, Northvolt’s CEO, told CNBC in February that his company has been working on a North American plant. And with the IRA that kind of plan [of] got a turbo boost given the very strong incentives,” he added.

Northvolt is in the midst of deciding whether to continue its expansion in North America before doing so in Germany.

Meanwhile, Ilham Kadri, CEO of Solvay, a chemical company headquartered in Belgium, said in January: “The reality is that the Biden administration is pushing when Europe regulates – to put it in black and white.”

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

“The focus of Tesla’s cell production is currently in the United States because of the framework created by the United States Inflation Reduction Act (IRA),” the company said Feb. 22, according to Reuters. A spokesperson for the company was not available Thursday when CNBC contacted him.

It’s because companies and analysts alike argue that the simplicity of the IRA is too appealing to pass up.

“First of all, the IRA is built very simply. And simplicity always wins. The machinery of the European Union, on the other hand, is much more complex,” said Maria Demertzis, a senior fellow at the Bruegel think tank.

“Will companies in the European Union or anywhere else put off investments they wanted to make in the European Union and actually reap the direct and very simple and immediate benefit that the IRA actually promises?”

It is something that European officials are concerned about, she added, and it comes at a particularly difficult time.

Economies across the EU cannot afford to lose key investments as they grapple with a cost-of-living crisis. The bloc also wants to be independent from China and others for critical materials like lithium.

“The EU is very aware that it needs to do more to compete internationally,” said Demertzis.

The European Commission, the EU’s executive arm, is still working on a Sovereignty Fund to finance green projects, but full details aren’t expected before June.