Tesla’s Long-Delayed German Gigafactory Gets Conditional Green Light | Investment News

By Nadine Schimroszik and Christoph Steitz

POTSDAM, Germany (Reuters) – Tesla Inc received a conditional green light for its German gigafactory near Berlin on Friday, the state of Brandenburg said, ending months of delay for the landmark $5 billion factory. euros ($5.5 billion).

The gigafactory, crucial to Tesla CEO Elon Musk’s ambitions to take on European market leader Volkswagen, was originally scheduled to open last summer.

Germany’s biggest automaker has the upper hand in Europe, with a 25% share of electric vehicle (EV) sales compared to Tesla’s 13%.

Brandenburg State Premier Dietmar Woidke told a press conference that the development was “a big step into the future”, adding that the Tesla factory would be a major industrial and technological driver for Germany and the region.

About 2,600 of the plant’s expected 12,000 workers have been hired so far, unions said last month, and Tesla is in talks with many parts suppliers in the area to source as much locally as possible. , thus reducing waiting times and costs.

Underlining the intense competition Tesla faces, Volkswagen said on Friday it would spend around 2 billion euros on a new factory near its Wolfsburg headquarters to manufacture the Trinity, the first of a new generation of electric vehicles. for the German manufacturer, whose construction should begin. Next year.

Friday’s 536-page conditional building permit for Tesla doesn’t mean the US-based electric vehicle pioneer can begin production immediately. He must first prove that he fulfills many conditions, in particular with regard to the use of water and the fight against air pollution.

Only then will Tesla get its long-awaited operating license and actually start rolling out the 500,000 battery-powered vehicles it aims to produce each year at the new factory, located in the small community of Gruenheide.

Another hurdle to securing the site’s water supply emerged on Friday night, when an administrative court in Frankfurt on the Oder sided with environmental groups who had challenged a license granted to a water utility. local water to supply the Tesla site.

But the court said procedural errors made in the permitting decision could be corrected by the water utility, leaving the door open for the water supply arrangement to be saved.

The start of production in Germany would mean Tesla could deliver its Model Y cars to European customers faster and more cheaply, after filling orders in Europe from its Shanghai factory in recent months as it awaited approval from the site.

Tesla plans to show it meets the imposed conditions within the next two weeks, said Brandenburg Environment Minister Axel Vogel, while objections can be filed within the next month.

Tesla’s next challenge will be to ramp up production as quickly as possible, which Musk said at an on-site fair in October would take longer than building the factory.

Local environmental groups have long feared that the plant will negatively impact local habitat. Numerous public consultations, focusing mainly on this aspect, have delayed the process, with Musk repeatedly expressing his irritation with German bureaucracy.

The plant, which Tesla has started building under pre-approval permits, will also include a battery factory capable of generating more than 50 gigawatt hours (GWh) per year – surpassing European competitors.

Batteries for cars produced locally will initially come from China, Musk said, but he aims to reach volume production at the German battery factory by the end of next year.

(Reporting by Nadine Schimroszik, Christoph Steitz, Jan Schwartz, Victoria Waldersee and Ludwig Burger; editing by Kirsti Knolle, Miranda Murray, Louise Heavens and Alexander Smith)

Copyright 2022 Thomson Reuters.

James R. Rhodes