Comment: The Tesla Gigafactory is coming to Berlin…



Tom Phillips
11/13/2019

It’s fair to say that Elon Musk, Tesla’s talismanic boss and chief provocateur, isn’t afraid of treading on some of the auto industry’s most senior toes.

That’s especially true if the opportunity to drop in the fact that Tesla’s much-rumored European Gigafactory will be built on a site in Grünheide, south-east Berlin, comes when he’s on stage in the city at Bild’s Golden Steering Wheel awards.

Cleaning up its act

The Golden Steering Wheel is arguably Europe’s biggest automotive industry awards event. It made headlines last year by being cancelled for the first time since 1976 in the wake of diesel emissions scandals rocking the German car industry. This year Bild admitted electric cars into the general awards categories instead of separating them.

Tellingly, in addition to seeing the Tesla Model 3 beat the BMW 3 Series and Audi A4 to best mid-size car, the mid-size and large SUV awards went to the Jaguar I-Pace and Audi e-tron respectively.

However, it was Musk’s announcement last night, in front of 200 top executives from Germany’s biggest OEMs, including VW chairman Herbert Diess, Audi boss Bram Schot, and Oliver Zipse, head of the board of BMW, that has understandably caused more of a stir.

Berlin is cool, but is it the best location?

Setting up a factory in the backyard of Europe’s biggest carmakers is a bold choice, but an increasingly intelligent strategy move given how much the VW Group et al is spending on electromobility.

VW’s Zwickau factory, south of Leipzig, has just begun producing ID3s, and has the capacity to build 330,000 EVs per year, while VW and Sweden’s Northvolt have announced their own plans for a battery gigafactory in Salzgitter, south-west of VW HQ in Wolfsburg, which will open in 2023. That means that supplier infrastructure of EVs in Germany will grow fast, and Tesla will be able to dictate some of that action, especially as it plans to begin production of Model Y crossovers in Germany by 2021.

However, Berlin is an interesting choice as the German capital is a relatively small player in the automotive industry – most other OEMs have HQs and factories further west.

The VW Group has some facilities in Berlin, with offices working on emobility research and consulting for the VW and Porsche brands in the city, and its We Share car sharing service being launched in Berlin earlier this year. The Group’s Future Center Europe, formerly its advanced design studio, is located in Potsdam, west of Berlin.

Daimler and BMW’s joint future mobility venture is located in Berlin, while Hyundai has its Cradle office that works with the city’s start-up scene.

However, manufacturing is limited to Daimler’s oldest plant, which sees 2,500 people make e-motors for its EQ vehicles, and BMW’s motorcycle factory that employs 2,000 workers.

Where are Tesla’s other Gigafactorys?

Tesla has a history of choosing slightly more left-field locations for its factories, including its Gigafactory 1 for car and battery assembly, which is near Reno, Nevada. The firm also has a photovoltaics factory, Gigafactory 2, in Buffalo, New York; and is just in the process of finishing Gigafactory 3, its latest facility in Shanghai, China, which is its facility most closely located to hubs of car production.

Although Tesla already has a final assembly facility in the Netherlands, its Tesla Gigafactory Europe, now unsurprisingly named Gigafactory 4, will be a fully-fledged battery and car assembly factory. Reports suggest it will employ 10,000 people who will build Model Y crossovers to begin with, with further opportunities likely in the supply chain.

The bigger Berlin picture

It’s difficult to talk Berlin without getting political. The city has just celebrated the 30-year anniversary of the fall of the Berlin wall that once encircled the west of the city, separating it from the communist east.

But while the physical barrier is long gone, the long shadow it casts still remains, with higher unemployment and fewer opportunities when compared to the rest of Germany. This is changing in Berlin itself, but Brandenburg, the area that surrounds Berlin, has been slower to see the benefit.

A major employer with significant global status could be part of bridging that divide, bringing welcome jobs to the area. The issue here is whether the roles created by Tesla benefit the wider area, or just encourage more people to move to Berlin – especially as the factory also includes provision for more management positions, research and development, and a design studio.

If it’s the latter, this could serve to increase the division between Berlin and Brandenburg, places further strain on Berlin’s housing stocks and increases the spread of gentrification – both significant issues that the city’s politicians are currently struggling with.

Likewise, Berlin-Brandenburg airport, which is just a few kilometers from the Tesla’s proposed factory site, is a running joke among Berliners. Construction of BER, the airport to replace both the current Tegel and Schönefeld airport, and now-closed Tempelhof, began back in 2006.

Due to open in 2011, the facility has been plagued by issues, from internal corruption, to fire safety, to a whole host of construction issues, and now won’t open until October 2020 at the earliest, although no one in the city is holding their breath.

Matching Tesla and Berlin

Musk’s shock and awe announcement is perfectly in keeping with the disruptive nature of the Tesla brand, and is something that’s certainly mirrored by Berlin’s reputation as a place where minds are open and anything goes.

But neither are perfect, and we’re keen to see if Berlin’s strong anti-car feeling, its collective dislike of firms like Google, and its tricky construction industry serve up their own bumps in the road. Needless to say, we’ll watch the situation closely from Automotive IQ’s base in the city to see if Musk’s force of will can ensure an on-time delivery of Gigafactory 4.

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IQPC Gesellschaft für Management Konferenzen mbH
Adresse: Friedrichstrasse 94, 10117 Berlin
Telefonnummer: 030 20913 -274
Fax: 49 (0) 30 20 913 240
Email Adresse: info@iqpc.de
Registereintragungen: Amtsgericht Charlottenburg HRB 76720
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Geschäftsführung: Silke Klaudat, Richard A. Worden, Michael R. Worden