Tesla faces judgment day over planned German factory water supply

A view shows the entrance to the construction site of the future Tesla Gigafactory in Gruenheide near Berlin, Germany, August 12, 2021. REUTERS/Hannibal Hanschke/File Photo

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  • Court ruling related to factory water consumption expected on March 4
  • The water supplier could be forced to terminate its contract
  • Current water reserves do not allow for expansion – supplier
  • Production license could be hundreds of pages – ministry

BERLIN, Feb 23 (Reuters) – Tesla (TSLA.O) could lose the water supply contract for its long-delayed German factory if environmental groups win a lawsuit challenging a license granted to its water supplier in a hearing next week.

The administrative court in Frankfurt an der Oder will hear on March 4 a complaint from local groups alleging that the Brandenburg Ministry of the Environment did not carry out sufficient checks before granting the license to the public utility Wasserverband Strausberg-Erkner (WSE).

If the groups win, WSE said it must cancel its contract with Tesla and negotiations would resume over where the plant could source water – likely a long process with no guaranteed solution.

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A court spokesperson said a decision was expected on the day of the hearing. Tesla declined to comment on the matter.

A further delay would put another wrench in the facility’s work just as a wider approvals process reaches its final stages.

Elon Musk had hoped that the factory – key to his ambitions to conquer the European market where Volkswagen (VOWG_p.DE) currently holds the upper hand with 25% of electric vehicle sales compared to 13% for Tesla – would be operational ago six months. .

Following delays, he said in October last year that he hoped to have it up and running by December. The company has not updated its launch schedule.

The groups complaining, Gruene Liga and Nabu, fear that the 1.4 million cubic meters of water a year that Tesla needs for the factory – equivalent to the use of a city of 30,000 people – do not empty the area of ​​drinking water.

WSE, run by the municipality, has itself reported concerns about the water supply.

Although Tesla’s plant doesn’t use a particularly large amount of water – others, like BASF’s (BASFn.DE) battery plant a few hours away, use more – the reserves of the region are limited, said WSE spokeswoman Sandra Ponetsky.

“We are a relatively water-rich country,” she said. “But we need help from other regions… Which vendor has the ability to magically squeeze so much water out of a hat in such a short time?”

EXPANSION CAPACITY

The dispute adds to a list of challenges Tesla has faced in recent months, from recalls in China and the United States to US regulators’ scrutiny of everything from Musk’s social media posts to accusations of discrimination against workers. Read more

The U.S. automaker announced record vehicle deliveries in the final quarter of 2021, but chief financial officer Zach Kirkhorn said last month that ramping up of plants in Berlin and Austin was needed to make up for lost production early last year due to supply chain and logistics issues.

“We intentionally put these factories in places where they have a fairly large amount of land and the ability to expand,” he said a few months earlier in October.

But WSE has made it clear that even if the court allows it to extract water for Tesla’s first stage of production, servicing any future plant expansion will be impossible without importing water from other regions. .

“We knew we were reaching our limits – but we predicted we would get there in 2050,” Ponetsky said. “Thanks to Tesla, we were catapulted forward 30 years.”

Elon Musk has repeatedly expressed his irritation with Germany’s complex bureaucracy, saying it contradicts the urgency needed to tackle climate change.

But activists in Brandenburg have raised numerous red flags against Musk’s factory on environmental grounds, expressing concern about everything from trees cleared for the factory to an endangered species of snake at the site – and now, in the water.

“Local people have been told for years to reduce their water consumption. Then the richest man in the world comes along and puts everything at his feet,” said Manuela Hoyer, a resident of Gruenheide and leader of a citizens’ initiative against the factory, mentioned. “There is something wrong with the system.”

The local environment ministry in Brandenburg maintains that there is enough water to serve the region and the Tesla factory.

“The local government does not consider drinking water for the region’s 170,000 inhabitants to be at risk,” regional environment minister Axel Vogel told the local parliament in January.

The court case is separate from the broader licensing process that Tesla is currently undergoing for the factory.

The ministry is in the final stages of approving Tesla’s 13,500-page application to begin commercial production, but it will still take “some time”, a spokesperson said.

“Even if it is positive, the decision will have a triple-digit page count, not low, with many conditions and requirements,” the spokesperson said.

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Reporting by Victoria Waldersee; Additional reporting by Nadine Schimroszik; Editing by Jan Harvey

Our standards: The Thomson Reuters Trust Principles.

James R. Rhodes