When you think of German cars, you likely think of the well-known and loved German car brands BMW, Mercedes Benz, Volkswagen, and Audi. However, you may soon find Tesla added to that list.
The Tesla “Giga-factory”
Tesla is in the midst of construction on a new factory in Germany. Tesla currently has manufacturing facilities in Nevada, New York, Shanghai, and will soon be opening their latest factory in Grünheide, Germany.
Tesla Inc. has, reportedly, purchased 300 hectares of land, a metric unit of square measure, equal to 100 acres. The plan is to begin construction this year, pending further approvals to clear the necessary land.
Why Germany?
Elon Musk, CEO of Tesla Inc. was paraphrased by CNBC, saying that Germany’s engineering prowess was part of the reason for choosing it as the new location for this factory. His other reason being that due to the apprehension surrounding Brexit, Germany was a preferable location to the U.K.
Germany’s Central European location may have also been a factor in this decision, we think, for distribution reasons.
What will this mean for the local economy?
Roughly 20 years ago, this area of Germany was considered as the manufacturing home of BMW, however BMW ultimately decided on Leipzig instead. Now, finally, Grünheide has the opportunity to be Tesla’s European foothold.
Tesla is planning to hire approximately 12,000 people to kickstart operation of the new factory, bring a decent amount of jobs to the area. Furthermore, this factory will have the capacity to produce as many as 500,000 cars a year!
Competitors feel the burn
Competitors such as Volkswagon and Daimler are feeling the sting of electric car technology as it disrupts the auto market. Although electric cars currently make up around 10% of new car registrations in Europe, this number is trending higher and could go higher still with Tesla’s influence. The growing popularity of electric cars is causing a shift in the balance of power within the global car business. As the trend toward electric continues, hundreds of suppliers that make parts for internal combustion engines will have to adapt to changing consumer preferences.
Even General Motors (G.M) has been dealt a blow from workers going on strike as staffing levels fluctuate. This of course is an effect of the company’s effort to redirect more resources towards manufacturing electric vehicles – in order to stay competitive.
However, consumers may be able to benefit from this market disruption. Tesla is to begin operations with the assembly of the lower-priced Model Y SUV at the Grünheide facility, injecting a lower-priced electric vehicle into the German market.
Facing Opposition
News of a factory coming to their small town was a surprise for many residents. People in Brandenburg (greater Grünheide) seem uncertain about this factory.
Tesla isn’t operating in Germany without its fair share of public resistance. Environmental activists raised concerns about the number of trees that would be cleared for construction on the facility. In fact, one local activist group, Green League Brandenburg, issued a court appeal against Tesla Inc.
However, Elon Musk issued a quote to CNBC in response stating that Tesla promised to “replant an area three times the factory plot, with mixed trees native to their habitat and the potential to become an old growth forest.” So far, Tesla Inc. has been given permission to clear 92 of the requested 300 hectares of land.
The bigger picture
It will be very interesting to see how Tesla’s entry into Germany plays out. Many residents, and apprehensive competitors will be watching closely to see how construction, and eventually operations kickoff in Grünheide, Germany. What will this mean for German Automobiles? Is Tesla is setting the stage to be Europe’s newest auto influencer?
Germany has great expectations for the future of automobiles and has an ambitious plan to make all cars 100% electric in just a few years. In fact, Germany’s goal is to go 100% electric by 2030.
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