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Tesla to Build Factory in Germany Amidst Brexit Uncertainty

Tesla and Musk to focus on SpaceX

Best-known for producing electric cars, Tesla, will build a car and battery factory near Berlin, founder and CEO Elon Musk announced in the German capital on Tuesday. Musk said via Twitter that Tesla “will build batteries, powertrains, and vehicles, starting with Model Y” lower-priced sports utility vehicle at the factory.

Elon Musk has said that Brexit uncertainty played a role in the firm’s decision to build its first European factory in Germany rather than the UK, which was earlier touted as the most preferred place for the project. The billionaire entrepreneur revealed that the firm’s European battery plant would be built on the outskirts of Berlin.

Musk said: “Some of the best cars in the world are made in Germany. Everyone knows that German engineering is outstanding, for sure, and that’s part of the reason why we are locating our Gigafactory Europe in Germany. We are also going to create an engineering and design centre in Berlin.” He said at a car industry awards ceremony on Wednesday night hosted by the German tabloid Bild.

The facility would be Tesla’s fourth, following the first Gigafactory battery plant in Nevada, near Reno; a factory that makes charging equipment and power electronics in Buffalo, New York, with plans to make Tesla Solar Roof tiles there someday; and another car plant that’s coming online in Shanghai.

Tesla previously said it aimed to start production in Europe in 2021. The moves come as the firm, which has also invested heavily in a Chinese factory, faces intensifying competition in the electric vehicle industry.

Musk has been speculating on a European production site for several years, and various European countries have mounted campaigns to lure the manufacturer to their soil. Tesla also considered multiple sites within Germany. The Tesla CEO did not immediately provide details on the factory size or the number of employees. At the same time, the company started listing jobs for the Germany site on Tuesday.

U.S. revenue dipped for Tesla in the third quarter. But its sales have increased in European countries throughout the first three quarters of 2019, despite a slowdown in the overall market for new cars in the region.

While Tesla’s sales have not significantly dented those of the traditional German carmakers, the speed with which it has managed to ramp up production has applied pressure on the likes of VW, BMW, and Daimler to accelerate their electrification plans. Building a factory in Germany could help Tesla avoid the complexities of exporting its cars from the states to Europe, and could help it avoid uncertainty around trade and tariffs.

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