Tesla’s Gigafactory in Berlin launches the German-made Model Y

The spotlight turned to Grünheide, Brandenburg, near Berlin on March 22, 2022, where Tesla, Inc. (TSLA) launched the first of its German-made Model Y cars (MIG Model Y) at Gigafactory Berlin, or Giga Berlin .

The high-profile event brought together Germany’s political figures, including German Chancellor Olaf Scholz, as well as Tesla CEO Elon Musk, who was there to hand over the first cars to customers.

Key points to remember

  • Tesla’s Gigafactory in Berlin is open after delays due to environmental concerns.
  • The plant will produce 500,000 cars a year when it reaches full capacity.
  • With Giga Berlin, Tesla is in a key position to face European competitors, such as Volkswagen AG.

Delays and Conditional Approval

The Berlin plant, slated to launch in the summer of 2021, has been delayed due to concerns about its impact on the environment. It was conditionally approved on March 4, and the plant’s facilities had to pass numerous tests, including to prove compliance with environmental mandates for water use and air pollution.

Production in Germany will allow Tesla to cut costs while filling customer orders faster. Tesla may be following the earlier success of Japanese internal combustion car makers, such as Toyota Motor Corporation (TM) and Honda Motor Company (HMC), which opened manufacturing plants in the United States and other countries. to gain market share.

The European market for electric vehicles

Tesla faces fierce competition from flagship European automaker Volkswagen AG (VWAGY), whose foray into electric vehicle (EV) manufacturing has earned it a sizable share of electric EV sales in Europe, even s he is behind Tesla. Tesla’s new 50-gigawatt-hour (Gwh) battery plant will overtake European rivals when it reaches volume production in late 2023. For now, cars made in Germany will be powered by batteries from China . Tesla’s Berlin plant is expected to start immediately with 500 cars per week and by the end of April to increase to 1,000. China will supply the 2170 battery for Tesla’s cars until the more fuel-efficient 4680 in energy is available in Berlin.

Giga Berlin criticizes for rising shares

At full capacity, the assembly plant and battery plant are expected to produce 500,000 electric vehicles and 50 Gwh of battery power per year. Musk and analysts who follow the company believe it will be some time before the Berlin factory reaches full capacity. Nonetheless, the Berlin launch is a bullish event for Tesla, according to Wedbush analyst Dan Ives, and its launch paves the way for Ives’ $1,400 price target for the stock. According to Ives, the regulatory victory and the actual launch in Berlin will position Tesla in an advantageous position and allow it to generate European sales from Europe rather than from its Gigafactory Shanghai in China.

Tesla shares rallied ahead of the Berlin plant opening and changed hands on March 23 at $1,010.82, below Ives’ target.

The essential

Giga Berlin offers production capacity and battery technology that could put Tesla ahead of competitors in Europe. Although still far from reaching full capacity, the plant will be a crucial catalyst for Tesla’s growing presence in the European electric vehicle market.

James R. Rhodes