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Bold Intentions: Why Elon Musk chose Germany for Tesla's next Gigafactory
Posted on December 01, 2019 by Charles Morris
What’s the sensible next step for a company that’s just completed an enormous new factory at breakneck speed? We have no idea, but for Tesla the thing to do is to start planning another. Even before Gigafactory 3 near Shanghai is in full production mode, the trend-setting automaker has chosen a site for its next facility. Speaking at a recent event in Germany, where he received a Golden Steering Wheel award from the German tabloid Bild, Elon Musk announced that Tesla has chosen the Berlin area as the location of Gigafactory 4.
Above: Outside of Tesla's factory in Europe (Flickr: Jakob Harter)
“Everyone knows that German engineering is outstanding, for sure. That’s part of the reason why we are locating our Gigafactory Europe in Germany,” said Musk. “We are also going to create an engineering and design center in Berlin, because Berlin has some of the best art in the world.”
“I come to Berlin a lot - Berlin rocks!” Musk added. He said the factory will be located near Berlin’s airport, but declined to offer more details.
Speculation about the location of the next Gigafactory has been running rife for the last couple of years, and several European countries and regions mounted campaigns to woo the California carmaker. In 2018, Musk said that Germany was the “leading choice,” but the choice of Berlin came as something of a surprise.
Above:Tesla's decision to select Germany over the UK for its forthcoming European Gigafactory (YouTube: euronews)
Musk told Auto Express that England wasn’t considered as a site: “Brexit [uncertainty] made it too risky to put a Gigafactory in the UK.” Earlier plans for an R&D center in Britain, which ironically is an e-mobility leader, were also shelved.
Some noted that Germany has some of the highest labor and energy costs in the world, but for Tesla, access to modern infrastructure and world-class engineering talent plainly outweighs such considerations. Morgan Stanley analyst Adam Jonas recently wrote that Germany would be the logical choice for the new Gig, noting that it is “the heart of the global luxury-auto market, with an economy dependent on internal-combustion tech and a government focused on climate change.”
In terms of Tesla’s overriding mission of accelerating the transition to EVs, the choice makes a lot of sense. Germany’s auto industry has fallen out of the lead lap in the electrification race, but the Volkswagen Group has a convincing strategy to take the lead. With Tesla racing on their home track, the Germans will be forced to compete, cooperate or (hopefully) both. As the Detroit News put it, Elon Musk is “sending a stark message to some of the world’s most prestigious automakers that he’s headed for their home turf.”
Tesla has reportedly begun listing jobs related to Gigafactory 4 on its web site. No timetable has been offered, but earlier this year, Musk said he expects the new European plant to be in service by the end of 2021.