Elon Musk announces plans for Berlin Tesla plant

Tesla chief Elon Musk grabbed the headlines on a flying visit to Berlin on Tuesday, announcing he would build his first European production facility near the German capital.

Mr Musk said in a tweet that Brandenburg, the state surrounding Berlin, had wooed him successfully for a "Gigafactory 4" facility, building "batteries, powertrains and vehicles".

He added that the first vehicle to be built in the German plant would be the Model Y, a lower-priced sports utility vehicle. About 10,000 jobs are expected to be created. In addition Mr Musk’s firm is expected to open an engineering and design centre in Berlin.

“Everyone knows that German engineering is outstanding and that’s part of the reason we are locating our Gigafactory Europe in Germany,” he said.

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Mr Musk made the announcement after the Tesla Model 3 snatched the award for the best car in the middle/upper vehicle class at the annual Goldene Lenkrad (Golden Steering Wheel) automotive awards organised by car magazine Autobild, a sister publication of Bild.

‘Berlin rocks’

The German tabloid said the factory would be built near the new Berlin-Brandenburg international airport, which is supposed to open next year – seven years late.

“We’ll definitely have to adopt a faster pace than the airport,” joked Mr Musk.

Other reasons for coming to the German capital were, he said, its world-class art collections. “Berlin rocks,” he said.

The announcement caught attendees at the Berlin awards ceremony off guard and the Tesla chief executive provided few details.

One source said the factory would be built near Grünheide, a nature reserve east of the new airport. Various European countries have been trying to woo the temperamental Tesla boss in recent years, with Mr Musk saying in the past that “the German-French border makes sense” as a factory location.

Choosing Brandenburg for his Gigafactory 4 – following Nevada, New York state and an unfinished factory in Shanghai – is a big boost for the economically struggling state of Brandenburg.

State premier Dietmar Woidke said he and his government had "lobbied for this for a long time in intensive talks and with good arguments".

“It’s great news for our state,” he said. “I’m happy that Elon Musk has decided on our location in Brandenburg.”

The news is a jolt for Germany's traditional car companies: its executives have struggled to develop e-mobility strategies and have attended countless summits on the issue with chancellor Angela Merkel, the latest last week. After several false starts, Volkswagen last week presented what it hoped would be the world's first mass-market electric car, the ID.3.

Warning shot

At the Berlin event on Tuesday night, Volkswagen chief executive Herbert Diess, joined Mr Musk on stage and praised him for "pioneering, for pulling us, for pushing us".

In a friendly warning shot, Mr Diess said VW and Tesla had a “shared vision” but added: “German industry is really now strongly investing and we will keep you alert.”

German car expert Prof Ferdinand Dudenhöffer said interesting times loomed were ahead and when the disruptive US car company set up shop outside the German capital – not previously known for its motoring tradition.

“Competition has always ensured things get better and quicker,” he said. “With Elon Musk’s decision for Germany, the country will be strengthened and e-mobility will gather more pace than 100 summits in the chancellery.”

Prof Dudenhöffer said he was taking the job numbers with a pinch of salt, noting that battery production was a high-energy business and Germany’s high energy costs would make his China production facility more interesting.

“Brexit [uncertainty] made it too risky to put a Gigafactory in the UK,” Mr Musk said.”