Dancing Musk hands drivers first Teslas from new German factory

GRUENHEIDE, Germany -- Tesla CEO Elon Musk was cheered as he oversaw the handover of the first Model Y cars built at the automaker's new 5 billion euro ($5.5 billion) plant in Germany.

Loud music played as 30 customers and their families got a first glimpse of their new vehicles through a glitzy, neon-lit Tesla-branded tunnel, clapping and cheering as Musk danced and joked with fans.

The ceremony on Tuesday launched Tesla's first European production hub with the biggest investment in a German car factory in recent history.

"This is a great day for the factory," Musk said, describing it as "another step in the direction of a sustainable future."

Tesla has faced opposition to the plant, delaying its opening by eight months, and some environmental activists blocked the factory's entrance while displaying banners flagging its high water use.

Two protestors abseiled from a highway sign near the factory, blocking traffic for hours after the event.

Tesla's chosen customers on Tuesday received the Model Y Performance configuration, a vehicle costing 63,990 euros ($70,334) with a 514 km (320 miles) range.

New orders from the plant could be delivered from April, Tesla said.

The opening of the factory in Gruenheide, 35 km (22 miles) southeast of Berlin, comes after Musk in a tweet last week flagged his Master Plan Part 3 for Tesla, which he said will map out scaling the company to "extreme size."

More than 3,000 of the plant's expected 12,000 workers have been hired so far, Tesla said on Tuesday.

Until now Tesla has imported cars into Europe orders from its Shanghai factory, driving up logistics costs. "Makes a huge difference to capital efficiency to localize production within a continent," Musk tweeted.

At full capacity, the new plant will produce 500,000 cars annually, more than the 450,000 battery-electric vehicles that main rival Volkswagen Group sold globally in 2021. It will generate 50 gigawatt hours (GWh) of battery power, surpassing all other plants in the country.

For now, Volkswagen Group holds the upper hand in Europe's electric vehicle market, with a 25 percent market share to Tesla's 13 percent.

Musk has warned that ramping up production will take longer than the two years it took to build the plant.

JPMorgan forecast that the factory would produce around 54,000 cars in 2022, increasing to 280,000 in 2023 and 500,000 by 2025.

VW, which has already received orders for 95,000 battery-electric vehicles in Europe this year, is planning a new 2 billion euro EV plant alongside its Wolfsburg factory and six battery plants across Europe.

But its timeline lags Tesla's, with the new Wolfsburg factory due to open in 2026 and the first battery plant in 2023.

German Chancellor Olaf Scholz attended the plant opening. He said the factory was a sign of progress and the future of the car industry.

Environmental groups gathered outside the plant on Tuesday with banners, pots and pans to express their concerns, ranging from the plant's high water use to the trees felled to build it.

Tesla received the final go-ahead from local authorities on March 4 to begin production, provided it met several conditions on issues including water use and air pollution control.