It’s electric

Report: Europe’s Tesla gigafactory could be in Germany

tesla gigafactory in europe
What’s Europe like, dad? Source: Bloomberg

Tesla is expanding its international operations in an attempt to lap other electric-car makers. The Wall Street Journal reported the Silicon Valley company is planning to build a “gigafactory” in Europe, and is looking particularly closely at Germany and the Netherlands.

The factory would produce cars and batteries under one roof. The newspaper said officials of the western German states of Rhineland-Palatinate and Saarland as well as the Netherlands have been lobbying Tesla directly. Founder Elon Musk had expressed his consideration of the locations in a tweet in June: “Germany is a leading choice for Europe. Perhaps on the German-French border makes sense, near the Benelux countries,” he wrote.

Mr. Musk said Tesla plans to announce a location for its European gigafactory by the end of this year. Setting up shop along the French-German border would give his company easy access to some of its most important markets.

Tesla’s European operations are currently based in Tilburg in the Netherlands, where American-made cars are modified for the local market. Tesla produces the cars in Fremont, California, and the batteries outside of Reno, Nevada. The company produced 88,000 vehicles in the first half of 2018.

A Tesla outpost in Germany

There’s a lot of pressure on Tesla to meet its production goals for the cheaper Model 3, which costs $50,000 as compared to the Model X, which starts at $80,000. Along with its plans for a compact SUV called Model Y, all signs point to Tesla’s transformation from a niche luxury brand to an automaker for the masses.

Building up his production capacity in Europe and China plays to those plans. Just earlier this month, Mr. Musk announced plans for a gigafactory in Shanghai, where he wants to produce 500,000 vehicles annually by 2020. This would help his Chinese customers avoid the 40 percent duty levied on autos imported from the US.

Europe would love to see a similar investment, but German automotive companies have been loath to get into the battery-making business. However, a Chinese saw the potential for domestic production and is picking up orders for billions of euros in electric vehicle batteries.

As for Tesla, it already has a foothold in Rhineland-Palatinate: The firm acquired an automotive robotics company called Grohmann there in 2016.

Grace Dobush is an editor with Handelsblatt Global in Berlin. Stephanie Ott is a Handelsblatt reporter for based in New York. To contact the authors: grace.dobush@gmail.com, s.ott@extern.handelsblattgroup.com.

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