Euro technology Tesla has selected Berlin as the location to build its European gigafactory

Euro technology

Tesla CEO Elon Musk revealed that the electric vehicle (EV) maker has chosen to build its European gigafactory in a location around Berlin, Germany, according to TechCrunch.

euro technology The Global Fleet Of Electric Vehicles

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The EV plant will build powertrains, batteries, and vehicles, starting with the company’s upcoming Model Y compact crossover utility vehicle. The location will also build its mid-range Model 3 sedan and is expected to begin production by 2021, per Tesla’s Q3 2019 Update. 

Here’s why Germany is the logical choice for Tesla’s EV production: 

  • The German government offers stability and has a long-term plan to support the growth of the EV market. The German government has repeatedly expressed a commitment to enabling a viable EV market: Chancellor Angela Merkel voiced her vision for a network of 1 million EV charging points in the country by 2030, for example, and the government plans to raise subsidies on EVs. Moreover, Germany has a set future in the European Union (EU) — an important factor for Tesla. Before settling on Germany, it was mulling over a site in the UK, but the country’s uncertain future in the EU pushed the company to choose Germany.
  • Tesla’s decision to position itself near its rivals enables it to better recruit existing talent and take advantage of well-established supply chains. German-based rivals including Volkswagen (VW), Daimler, and BMW have each committed billions to developing EVs, building up expertise, and establishing supply chains with new vendors. Tesla could pull from this pool of EV design and manufacturing talent to improve its operations in the country.

Competition in Europe was already fierce, but now automakers are being put on alert as they face Tesla, which is arguably the face of the EV movement. Sales of chargeable vehicles in the region increased 52% year-over-year from Q3 2018 to Q3 2019 to reach 110,630, according to the European Automobile Manufacturers Association.

With nearly every major automaker in the region making moves to capture a piece of this growing market, share will become harder to come by. And competition will heat up further now that Tesla, often considered the global EV leader, has decided to set up local operations of its own.

There are a number of avenues European automakers can take to hold off Tesla. Perhaps the easiest would be to join forces with each other to share technology and resources, enabling them to bring best-in-class products to market. Another avenue, though riskier, is to push up EV timelines to beat Tesla to market. If automakers can avoid manufacturing blunders and hold the amount of debt needed to move up timelines, they would be in line for larger gains from an early mover advantage. Regardless of what European automakers do, they need to start building out a Tesla strategy now. 

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