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February 08, 2021 07:30 AM

Tesla's European plant faces 'massive' delay, sources say

Burkhard Riering
Automobilwoche
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    Tesla said it might not be able to meet its project construction timelines because of issues such as "bringing production equipment and processes online with the capability to manufacture high-quality units at scale."

    Tesla faces a "massive delay" to its target of starting production at its new European plant in the summer, sources told Automobilwoche, a sister publication of Automotive News Europe.

    Critical buildings have not yet been erected on the site in Gruenheide near Berlin, five months before the planned opening of the factory, sources close to the company said. Tesla also has not yet submitted a building application to the local government office for a battery plant that the company plans to build at the site, they said.

    Tesla aims to begin production of the Model Y compact crossover at the factory in July, with an eventual capacity of 500,000 vehicles a year, also including production of the Model 3 and a possible compact hatchback designed for Europe.

    In a filing with the U.S. Securities and Exchange Commission on Monday, Tesla pointed to its limited vehicle manufacturing experience outside of its Fremont factory in California. It said it might not be able to meet construction timelines because of issues such as regulatory compliance, procurement and supply chain constraints, hiring staff and "the pace of bringing production equipment and processes online with the capability to manufacture high-quality units at scale."

    DAILY NEWSLETTER: Sign up and get the top news of the day in Europe every business weekday.
    Less battery aid

    Tesla could also receive far less government aid for the battery part of the project than has been reported.

    The European Union last month approved state aid to Tesla, BMW and other companies to help strengthen the bloc's position in the race to produce more electric vehicles.

    Business Insider reported on Feb. 1. that Tesla would receive 1 billion euros ($1.2 billion) in government aid for the battery part of the project.

    A spokeswoman for the German Federal Ministry of Economics told Automobilwoche: "We cannot currently confirm the figures circulating about funding levels for Tesla. There is currently no final funding amount for individual projects."

    In its filing Tesla said: "We have applied for a grant with the German government to improve the design, chemistry, manufacturing technology and recycling of lithium-ion battery cells for Gigafactory Berlin. The grant was approved by the European Commission in January 2021 and its implementation will be subject to a grant agreement with the German government."

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