Skip to main content
Sister Publication Links
  • Automotive News
  • Automobilwoche
  • Automotive News Canada
  • Automotive News China
Subscribe
  • Subscribe
  • Newsletters
  • Login
  • HOME
    • Latest news
    • Automakers
    • Suppliers
    • New Product
    • Environment/Emissions
    • Sales By Market
    • On The Move
    • Auto Shows
    • mercedes_eqs_int_11.jpg
      Daimler CEO expects solid returns from flagship EV
      batteries.png
      Korean battery makers agree to last-minute deal
      Volvo CFO Bjorn Annwall
      Volvo promotes Europe boss Annwall to finance chief
      Chipmaker Renesas resumes operations of damaged clean room
    • Tesla criticizes slow approval process for German factory
      Toyota debuts advanced automated driving
      Alfa Romeo Tonale launch delayed after new CEO demands better performance
      tesla camera story.jpg
      Tesla says interior cameras are not activated in China
    • Chipmaker Renesas resumes operations of damaged clean room
      4BIDEN-MAIN_i.jpg
      U.S. Senate readying legislation on semiconductors, Biden says
      Path out of chip shortage: New capacity, new thinking -- and patience
      Britishvolt's 30 gigawatt-hour plant in Blyth, England, is scheduled to start production in 2023.
      EV battery company Britishvolt looks for a SPAC deal
    • Toyota cuts estimated emissions for full-hybrid Yaris Cross SUV
      Alfa Romeo Tonale launch delayed after new CEO demands better performance
      NUtoyota1.jpg
      Toyota touts GR 86's sleeker design, higher power
      HummerSUV-MAIN_i.jpg
      GMC to launch electric Hummer SUV in 2023
    • Audi's plant in Gyor, Hungary, VW Group's biggest engine factory, built 1.6 million engines in 2020.
      VW brand will phase out combustion engines, CEO says
      The sales rollout of the ID4 is starting in Europe, the U.S. and China
      The UK's conflicting stance on EVs
      Valeo joins Bosch, GM, others in pledge for carbon neutrality
      GMEVBarra-MAIN_i.jpg
      GM aims to stop selling gasoline vehicles by 2035 in carbon neutrality pledge
    • Spain offers private and business drivers subsidies to buy EVs
      Stellantis brands dominated van sales in EU in 2020, figures show
      VW cars Germany
      German sales rise 36% in March but fall 6% in the first quarter
      Audi car sales
      German auto industry gets spring boost as orders rise
    • Volvo CFO Bjorn Annwall
      Volvo promotes Europe boss Annwall to finance chief
      andersson.jpg
      Bo Andersson steps down from Yazaki
      John-Krafcik-bloomberg.jpg
      Krafcik leaves Waymo after 5 years as CEO
       Daimler's new chairman, Bernd Pischetsrieder, with Manfred Bischoff
      Daimler's shareholders approve former BMW, VW CEO Pischetsrieder as chairman
    • Geneva Auto Show
    • Frankfurt Auto Show
    • Paris Auto Show
    • Beijing Auto Show
    • Shanghai Auto Show
  • Features
    • Long Read
    • Interview of the Month
    • Focus on Electrification
    • Focus on Mobility
    • Segment Analysis
    • Latest Launches
    • Supplier Spotlight
    • Europe By The Numbers
    • Path out of chip shortage: New capacity, new thinking -- and patience
      Apple, Nio, other auto newcomers get creative to avoid Tesla's 'production hell'
      How Amazon, Google are transforming the auto industry
      EV-only future looks closer than ever in Europe
    • Ford of Europe plans more changes to reposition business for EV-focused future
      Renault CEO bets on 'winning horses' for turnaround
      Nvidia CEO says software will soon define the car, drive profit
      Tavares: Keeping PSA, FCA merger on track an 'incredible' achievement
    • Spain offers private and business drivers subsidies to buy EVs
      Nidec Serbia
      Nidec plans $1.8B European electric motor hub
      Britishvolt's 30 gigawatt-hour plant in Blyth, England, is scheduled to start production in 2023.
      Britishvolt eyes Canada for home to new battery factory
      Tesla criticizes slow approval process for German factory
    • Toyota debuts advanced automated driving
      Argo AI-MAIN.jpg
      Self-driving startup Argo AI, backed by VW and Ford, may go public to boost funding, report says
      John-Krafcik-bloomberg.jpg
      Krafcik leaves Waymo after 5 years as CEO
      Lilium air taxi.jpg
      German flying taxi startup Lilium to float in U.S.
    • Smart EQ ForTwo electric being charged
      Minicars race toward electric future
      EVs make huge gains helped by incentives, tougher CO2 rules
      EVs, surging SUVs to hit Europe's biggest segment
      Wagons hold market share, but costly EV shift looms
    • Alfa Romeo Tonale launch delayed after new CEO demands better performance
      VW adds sporty crossover with Taigo
      17266_Kia_EV6_GT-Line_0.jpg
      Kia adds powerful GT to EV6 lineup
      Audi Q4 e-tron prototype.jpg
      Audi's entry-level EV, the Q4 e-tron, starts production
    • Vitesco's optimism about EV shift grows as spinoff nears completion
      How GKN is transforming to gain from e-powertrain shift
      Marelli CEO expects e-powertrains to provide long-term boost
      Veoneer boss expects to reach key milestone this quarter
    • Europe sales by model, February: Tesla, Ferrari, Lotus, Aston Martin rise despite down market
      Top 10 sellers by market, 2 months: Skoda Octavia makes the cut in 18 out of 27 countries
      Nissan Qashqai
      Turkey sales, February: Nissan, Fiat, Skoda report strong gains
      Russia sales, February: Market bounces back with small increase
  • Opinion
    • Blogs
    • Commentary
    • Guest columnists
    • Volvo Google infotainment
      Volvo expands upon positive Google experience
      Volvo front grille
      Volvo targets top talent in U.S., China with generous parental leave policy
      Great Wall ORA R1 at 2019 Shanghai auto show
      ZF exec on why China's auto shows will survive
      The sales rollout of the ID4 is starting in Europe, the U.S. and China
      The UK's conflicting stance on EVs
    • Understanding the impact of design on marketing, brand and user experience
      Ex-Aston Martin CEO Palmer calls on UK to intensify battery commitment
      Why Apple must target the $230B luxury car market
      Apple car: Who will build it? Magna Steyr possible candidate
  • Photos
    • Photo Galleries
    • Geneva Photo Gallery
    • Beijing Photo Gallery
    • Frankfurt Photo Gallery
    • Paris Photo Gallery
    • Shanghai Photo Gallery
    • mercedes_eqs_int_6.jpg
      view gallery
      12 photos
      Mercedes EQS Interior
      Green Peugeot 308 1.jpg
      view gallery
      17 photos
      Peugeot 308
       bmw_i4_6.jpg
      view gallery
      6 photos
      BMW i4
       aygo_x_6.jpg
      view gallery
      15 photos
      Toyota Aygo X Prologue
    • koenigsegg-gemera-front-quarter-passenger-01.jpg
      view gallery
      14 photos
      Koenigsegg Gemera
      view gallery
      21 photos
      Fiat New 500
      view gallery
      11 photos
      Aston Martin V12 Speedster
      view gallery
      13 photos
      Audi A3 Sportback 2020
    • At the Beijing show, sales rebound and EV boom mix with murky outlook
      3BEIJING-MAIN_i.jpg
      Beijing show to highlight competition for local EV makers
      Beijing auto show delayed due to coronavirus
      Maserati will unveil Ghibli hybrid at Beijing show
    • view gallery
      11 photos
      Mercedes-Benz Vision EQS
      view gallery
      11 photos
      Renault Captur
      view gallery
      5 photos
      Mercedes-Benz AMG GLB 53
      view gallery
      10 photos
      Mercedes-AMG GLE 53 Coupe
    • view gallery
      8 photos
      VinFast Lux SA2.0 SUV
      view gallery
      8 photos
      VinFast Lux A2.0 sedan
      view gallery
      7 photos
      Toyota Corolla station wagon
      view gallery
      9 photos
      Seat Tarraco
    • view gallery
      4 photos
      Nio ET Preview
      view gallery
      7 photos
      Infiniti Qs Inspiration concept
      view gallery
      5 photos
      BMW 3-series LWB
      view gallery
      9 photos
      Mini Clubman
  • Podcasts
  • Car Cutaways
  • EVENTS
    • ANE Congress Conversations
    • ANE Shift
    • ANE Rising Stars
    • ANE Eurostars
    • ANE Leading Women
    • Watch Again
      • July 9: EU green deal in the COVID-19 new normal
      • July 16: Assisted or Autonomous Driving
      • July 23: Challenges in Electrification
      • July 30: The Road Ahead for Europe
    • Meet the 2020 winners
    • Watch the 2020 Rising Stars awards again
  • More
    • Publishing Partners
    • Social Media
    • Contact Us
    • Media Kit
    • About Us
    • Capgemini: Cloud: A springboard for future competitiveness
    • Capgemini: Securing the industry's future through a radical rethink
    • Capgemini: Succeeding with the automated driving journey through AI
    • Toyota Europe
    • UFI Filters
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter
MENU
Breadcrumb
  1. Home
  2. Automakers
November 14, 2019 06:03 AM

Tesla's German factory started with love letter from Berlin

Stefan Nicola and Birgit Jennen
Bloomberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    Musk is taking his fight for the future of transport into the heartland of the combustion engine, where the established players long laughed off Tesla.

    BERLIN --When Elon Musk tweeted last year that Germany was a front-runner for Tesla's first European car factory, it sent politicians into a frenzy to win over the billionaire.

    Berlin's economy minister, Ramona Pop, responded with a two-page letter that waxed lyrical about Musk as a pioneer and visionary and offered financial sweeteners to attract him to a city bustling with a vibrant tech scene and a network of auto research institutes. She even floated access to a nearby race track where Tesla could take its cars for a spin.

    As the beauty contest gained momentum, it turned into a battle. Two federal states that border France also touted their virtues. Musk already had a connection with that part of Germany from his purchase of an automation company there a few years ago. There's also Berlin's patchy track record shouldering large infrastructure projects -- its new airport remains a mothballed mess, years behind schedule and massively over budget.

    Yet when Musk's Gulfstream jet touched down in the German capital early this week, his mind was made up: the European gigafactory would sit on the outskirts of Berlin, with an additional engineering and design center within the city limits. Musk casually dropped the news at a red-carpet award populated by the top brass of Germany's car industry, including the CEOs of BMW and Volkswagen, two companies pushing hard into an electric future.

    "There was very intense competition in recent months among different European nations," Economy Minister Peter Altmaier told reporters on Wednesday in Berlin. "It's an important and positive development that Germany was chosen."

    Mounting pressure

    Musk is taking his fight for the future of transport into the heartland of the combustion engine, where the established players long laughed off Tesla as an upstart on feeble financial footing that couldn't compete with their rich engineering heritage. But Musk has captured the imagination of the think-different consumer, putting pressure on the Germans to respond. Volkswagen has pulled out all the stops, earmarking more than 30 billion euros ($33 billion) to develop the industry's largest fleet of electric cars.

    The choice of Berlin and its surrounding area hands Musk several advantages, not least free money in form of subsidies. There's the proximity to a government keen to sponsor the industry's transformation. Labor costs in eastern Germany are generally lower than in the traditional engineering hubs in the southern part of the country. And Berlin, where new startups are founded each day, is an attractive place to live for the tech workers Tesla would seek to attract for its design center.

    The area where Tesla plans to put the factory, called Gruenheide just east of Berlin in the state of Brandenburg, provides quick access via the Autobahn and a link to public transport. It's a site that BMW had considered before choosing the city of Leipzig a few hours south for a new factory in 2001, the last time a car company built a major new facility in Germany.

    Roller-coaster

    The government in Brandenburg, one of five federal states in the former communist east, also lobbied hard to win over Musk, offering at least 100 million euros in aid. The state's negotiators kept up the pressure in the past months, touting Brandenburg's proximity to Berlin, its skilled labor force and an abundance of clean-energy plants, Premier Dietmar Woidke said.

    "Berlin can do a lot that we aren't able to, and we can do a lot that Berlin can't," Woidke told reporters in Potsdam. "Together, that's an unbeatable mix."

    Officials in Brandenburg described the negotiations with Musk as an emotional roller-coaster ride, with the politicians struggling to read the billionaire's intentions. But by last week, things were looking up. After Musk arrived in Berlin, he toured the location where the factory would sit, and he took a local train back to central Berlin to try for himself how long the commute might take.

    Fresh from his experience building a factory in China, Musk had a demand that was as clear as it was hard to execute for notoriously bureaucratic Germans: to build the site as swiftly as the one in Shanghai, according to Brandenburg's economy minister, Joerg Steinbach. That caused considerable consternation among officials still chafing from the new-airport debacle.

    Shanghai factory

    Tesla long relied on a single assembly plant, based in Fremont, California, for its car production. The company is on the verge of starting sales of Model 3s produced at its latest facility, near Shanghai, which it erected in record time. Musk estimated earlier this year that Tesla's European gigafactory probably won't be operational until 2021.

    The factory will make batteries, powertrains and vehicles, beginning with the Model Y crossover unveiled earlier this year, he said in a tweet. It's also expected to churn out the Model 3, which beat out BMW and Audi for the award Tuesday night.

    With Tesla adding as many as 10,000 jobs to Berlin and the region, according to Bild, it's also a boon for the German capital and its burgeoning tech scene. Famously labeled "poor but sexy" by a former Berlin mayor, the city has thrived in recent years thanks to a steady influx of young entrepreneurs and IT professionals attracted by the capital's mix of affordable housing (the city just announced a rent freeze), top-notch universities, and homegrown tech successes including fashion retailer Zalando and food delivery startup Delivery Hero.

    In the last five years, Berlin's population has grown by almost 50,000 annually, underscoring its attraction that can't be matched by cities like Stuttgart, home to Daimler and Porsche, or Wolfsburg, where Volkswagen is based. As a sweetener, the Berlin government offered locations including the site of the existing Tegel airport for Tesla's design center.

    Tech hubs

    The appeal of Berlin hasn't been lost on Musk's rivals. Virtually all the major German carmakers have created tech hubs, and dozens of local startups are active in fields including artificial intelligence, 3D printing and autonomous driving. Tesla will have to compete for local talent with U.S. tech giants including Apple, Oracle, Google and Amazon, which is preparing to move into Berlin's highest office building by 2023 in the rugged-yet-fashionable Friedrichshain-Kreuzberg district.

    "The Berlin location, home to an ever growing co-working, digitally focused, young programming demographic, has already proved why many German OEMs such as Volkswagen, Porsche, BMW and Daimler are opening digital offices on the Spree" river, said Matthias Schmidt, an independent automotive analyst in Berlin.

    All the jubilation notwithstanding, Berlin and Brandenburg have their work cut out to build a new home for Tesla. The region lost most of its heavy industry during World War II, and much of what remained after the war was ground up by the country's separation. Siemens is the only global company with a sizable manufacturing footprint in Berlin.

    And the sprawling new airport, still under construction, is a massive blemish on the region's record of getting big projects off the ground. It's an ignominy that was on the U.S. billionaire's mind when he followed his announcement with an appeal to get the job done.

    "We definitely need to move faster than the airport," Musk said.

    RECOMMENDED FOR YOU
    Daimler CEO expects solid returns from flagship EV
    Recommended for You
    Daimler CEO expects solid returns from flagship EV
    Daimler CEO expects solid returns from flagship EV
    Musk's Las Vegas tunnel is like a Tesla amusement park ride
    Musk's Las Vegas tunnel is like a Tesla amusement park ride
    Renault names management team members for new Dacia-Lada unit
    Renault names management team members for new Dacia-Lada unit
    Cloud: A springboard for future competitiveness
    Sponsored Content: Cloud: A springboard for future competitiveness
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News Europe delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    SUBSCRIBE TODAY

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    SUBSCRIBE NOW
    Connect with Us
    • Twitter
    • Facebook
    • LinkedIn
    • Instagram

    Founded in 1996, Automotive News Europe is the preferred information source for decision-makers and opinion leaders operating in Europe.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI  48207-2997
    Tel: +1 877-812-1584

    Email Us

    ISSN 2643-6590 (print)
    ISSN 2643-6604 (online)

     

    Resources
    • About us
    • Contact Us
    • 2020 Media Kit
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Awards
    • Rising Stars
    • Eurostars
    • Leading Women
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Europe
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • HOME
      • Latest news
      • Automakers
      • Suppliers
      • New Product
      • Environment/Emissions
      • Sales By Market
      • On The Move
      • Auto Shows
        • Geneva Auto Show
        • Frankfurt Auto Show
        • Paris Auto Show
        • Beijing Auto Show
        • Shanghai Auto Show
    • Features
      • Long Read
      • Interview of the Month
      • Focus on Electrification
      • Focus on Mobility
      • Segment Analysis
      • Latest Launches
      • Supplier Spotlight
      • Europe By The Numbers
    • Opinion
      • Blogs
      • Commentary
      • Guest columnists
    • Photos
      • Photo Galleries
      • Geneva Photo Gallery
      • Beijing Photo Gallery
      • Frankfurt Photo Gallery
      • Paris Photo Gallery
      • Shanghai Photo Gallery
    • Podcasts
    • Car Cutaways
    • EVENTS
      • ANE Congress Conversations
        • Watch Again
          • July 9: EU green deal in the COVID-19 new normal
          • July 16: Assisted or Autonomous Driving
          • July 23: Challenges in Electrification
          • July 30: The Road Ahead for Europe
      • ANE Shift
      • ANE Rising Stars
        • Meet the 2020 winners
        • Watch the 2020 Rising Stars awards again
      • ANE Eurostars
      • ANE Leading Women
    • More
      • Publishing Partners
        • Capgemini: Cloud: A springboard for future competitiveness
        • Capgemini: Securing the industry's future through a radical rethink
        • Capgemini: Succeeding with the automated driving journey through AI
        • Toyota Europe
        • UFI Filters
      • Social Media
        • Facebook
        • Instagram
        • LinkedIn
        • Twitter
      • Contact Us
      • Media Kit
      • About Us