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Tesla Goes Big in Germany

The assembly plant Tesla plans to build in Germany next year eventually will be able to make as many as 500,000 electric cars per year—and enough batteries to power all of them.
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The assembly plant Tesla plans to build in Germany next year eventually will be able to make as many as 500,000 electric cars per year—and enough batteries to power all of them.

The €4 billion ($4.4 billion) complex also will spawn 10,000 jobs, according to the German tabloid Bild, which cites site planning documents.

Tesla isn’t talking. But assuming Bild’s report is correct, the European factory eventually will be roughly comparable in size, employment and capacity to the company’s home plant in Fremont, Calif. It’s tough to know for sure. CEO Elon Musk, known for changing his statistics frequently, prefers to describe Tesla output in terms of highly volatile weekly production rates.

Nick of Time

Musk says the Germany plant’s first model will be the Model Y, a high-roofed crossover vehicle variant of the company’s Model 3 small sedan. Tesla unveiled the Model 3 lookalike in March, but Model Y production won’t start until about mid-2020.

Tesla Model Y.   Source: Tesla

Europe is a key market for Tesla. The company prudently established a toehold there years ago by shipping cars in from California. But in it’s a costly way to do business, since Europe levies a 10% tariff on each imported vehicle. International shipping also slows response time for custom orders.

Tesla needs to rid itself of both those hindrances, and fast. By the time the factory opens in 2022, the company’s European competitors will be in full swing with their own EVs. Tesla has enjoyed a strong reception in Europe to date. But that honeymoon is rapidly fading.

The China Model

Luckily, Tesla has honed its plant-opening skills in China, where it also established itself with American-made cars. In November, the company officially opened a $2 billion factory in Shanghai to make $50,000 Model 3s. 

The Shanghai facility went from groundbreaking to opening day in an astonishingly short 11 months. The biggest benefit: Cars made there will sidestep China’s trade war-inspired 25% import tax on U.S. cars.

The giant complex, Tesla’s first full assembly plant outside the U.S., is likely to add the Model Y late next year.

 

 

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