Tesla expects to start Model Y production in Germany by the end of the year

Tesla expects to start limited production of the Model Y crossover at its new plant near Berlin before the end of this year despite construction delays, CEO Elon Musk told investors.

The factory, Tesla's first in Europe, has run into bureaucratic roadblocks that forced the automaker to delay the production start from its original date of July.

On an earnings call on Monday, Musk said that Tesla "expects to be producing the new design of the Model Y in both [Germany and Texas] in limited production later this year."

Besides the plant in Gruenheide near Berlin, Tesla is also building a new factory in East Austin, Texas.

Musk spoke of the "agony of a manufacturing ramp" as the company works to expand its production network, which currently comprises plants in Fremont, California and Shanghai, China.

Tesla has hit a series of environmental and planning hold-ups at the German plant.

Most recently, two environmental groups asked a court to force Tesla to relocate a population of endangered sand lizards that live on the site as well as some adders that prey on the lizards and are considered a threatened species.

Tesla has also given itself extra work by redesigning the Model Y for its Gruenheide and Texas production to include new aluminum casting for rear body structure, including the crash rails. The Model Y built in California only casts the front body structure, itself a new technique.

Musk also said on the call that Tesla plans to make the battery pack for the new Model Y part of the body structure and they will feature new, larger 4680 cells.

"From a physics standpoint, this is the best architecture, and from an economic standpoint it is the lowest cost way to go," Musk said.

However, Musk said the company had a back-up plan to build the Model Y in Berlin and Texas with a non-structural pack and the automakers' current, smaller 2170 cells.

"We still have work ahead of us before we can achieve volume production" of the 4680 cells, Musk said.

In the interim, Tesla has begun exporting Chinese-built Model Ys to Europe with deliveries starting in August, the German news agency dpa reported, citing an official Tesla communication

The Model Y competes against premium compact and midsize SUVs. The SUV is slightly larger than Tesla's entry-level car, the Model 3 sedan.

Tesla wants to produce around 500,000 Model Y and Model 3 cars annually at the Gruenheide factory.

The Model 3 was Europe's second best-selling car for the month of June with sales of 25,934, according to figures from JATO Dynamics market researchers.

Uneven deliveries across the year however meant the car fell outside the top 10 for the first six months with a total of 66,864 sales.