Why Germany Wants Elon Musk?
Or is it the other way around?
Last year in November, Tesla’s Elon Musk announced the plans to build a Gigafactory in Germany in an award show. Musk has talked about Tesla’s aims to build a factory in Europe for years.
In 2016, the Tesla CEO suggested that the first Gigafactory in Europe must be in Germany after Tesla acquired Grohmann Engineering, a German manufacturing and automation design firm. Though the construction has received minor setbacks due to the Covid-19, the Berlin plant is making progress.
“You’ll have every assistance you need”, Peter Altmaier, Federal Minister of Germany for Economic Affairs and Energy.
The European Gigafactory is located around 20 miles southeast of Berlin in the Brandenburg town of Gruenheide. The foundation work has been started since May and the Coronavirus pandemic isn’t expected to disrupt the development of the plant as most of the work is handled by heavy machinery with a small number of workers making social distancing easier.
Tesla plans to finish the plant and start car manufacturing by mid-2021. This will be Tesla’s first Gigafactory on the European continent. The original Gigafactory is in Nevada and the second one is in Buffalo, New York. The first Asian Gigafactory was built in Shanghai, China last year.
Musk has been touring Germany since Tuesday, meeting with various ministers and politicians of the Christian Democratic Union Party. He had an hour-long meeting with the Economy minister of Germany, Peter Altmaier in Berlin. “We are very proud of your car plant in Brandenberg and we wish you good luck with that”, said the German minister, adding, “You[Musk] will have every assistance you need.”
While in Berlin, Elon also met Brandenburg state premier, Dietmar Woidke. He also reviewed the progress of the collaboration between the Tesla and German Biotech company, CureVac to develop a mobile molecule printer to make the potential Covid-19 vaccine.
The Tesla factory, when it becomes operational, could employ up to 12,000 people and can manufacture around 500,000 vehicles every year. This will be important for the local economy of Brandenburg and will also make Germany a possible hotspot for other foreign companies to look up to.
But environmental activists have been opposing the construction which requires to clear an area of around 91 hectares. The construction was brought to a standstill in February this year, as activists raised concerns over Tesla’s plan to chop down trees to clear land for the new plant. But Tesla received a green light from the German court to chop down the trees for the plant.
What’s for Tesla in this?
Tesla is moving into Germany’s heartland to vie with Volkswagen, BMW, and Daimler’s Mercedes Benz as the country targets a massive increase in electric car sales in the following years.
Tesla’s US revenue has dipped 34% in the fourth quarter of 2019 and its sales have decreased by 18% in the European continent. Still, the demand for EVs has been increasing considerably throughout Europe.
Germany has been the world factory for luxury cars and it has been hailed for its top-quality manufacturing of the cars. Tapping into this market would be difficult for Tesla but seeing the buzz that Elon Musk has created around Tesla cars the developments will be interesting to see.
Tesla is looking at Germany as a way to access the entire European continent and to flourish within the IC-engine car-dominated market. Tesla sales were already up and rising before the world got hit by the coronavirus.
When the Gigafactory is up and ready, Tesla will be able to manufacture cars within Europe and it could avoid the complexities around importing the cars from the US. This could bring the cost down significantly as no tariffs costs will be applied.
Tesla plans to produce its already popular Model-3 electric cars and forthcoming, crossover SUV, at the European Factory as the factory gets operational by mid-2021.
