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."
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.
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.