Tesla was gaining momentum in November 2019 when Elon Musk announced a massive electric vehicle manufacturing plant in Germany, the heart of European automaking. At that time, Tesla was profitable for several consecutive quarters, and the company’s stock price soared; more importantly, Tesla’s super factory in Shanghai had been completed, and it was ready to produce Model 3 electric vehicles only 11 months after the groundwork was laid.
On top of that, Tesla just struck a deal with Fiat Chrysler to sell carbon credits. Encouraged by the smooth operation of the Shanghai Gigafactory, coupled with ample funds from the sale of carbon credits, Musk intends to replicate this model in green-rich Grunheide, Germany. Tesla plans to spend $4.9 billion to build a factory about 38 kilometers east of Berlin, Germany. In July 2020, Musk wrote on his personal social media: “The Berlin Gigafactory will rise at an almost impossible speed.”
but it is not the truth.
Now that the main body of the Berlin Gigafactory is nearing completion, the factory may not start producing Model Y electric vehicles until 2022, which is several months later than the original goal of starting production on July 1 this year. Taking into account the EIA process in Brandenburg, the start of production was even longer than planned.
The first step in the preparatory work of Tesla’s Berlin Gigafactory is to cut down more than 2,000 acres of forest
In fact, Tesla’s problems with building a factory in Germany are much more difficult than Musk expected. Tesla dismantled the unexploded World War II bombs at the site selection site, cut down thousands of acres of trees, and caused damage to the habitats of bats and other animals; coupled with the huge demand for water resources for factory construction, this project was also affected by environmental protection. strong opposition from people.
Germany’s largest union, IG Metall, is trying to organize at the Tesla factory. In addition to this, the Berlin Gigafactory project has come under scrutiny for possible labor law violations during construction and could be fined for installing sewage pipes without permission.
Better with less bureaucracy
Matthias Schimdt, an independent auto analyst in Berlin, Germany, said: “Although the Tesla factory looked like it was going well a few weeks ago, there are actually undercurrents.” He believes that Tesla The progress of this project is much like the new airport in Berlin, Germany.
The construction of the new airport was rapid, but the operation was delayed by nearly 10 years due to difficulties in obtaining approval from German government agencies for the operation application. “While Tesla is just a stone’s throw away from opening the new airport in the German capital just last year, the situation is different,” Schmidt said. “It just highlights that in Germany, where ‘bureaucracy’ prevails, things don’t work out. Easy to do.”
The European auto market is lucrative, but Musk has been slow to achieve his goal of breaking into the local market. Especially as it competes with German automakers such as Volkswagen, Daimler and BMW, the delay in the start of production at the Berlin Gigafactory complicates how Tesla can maintain its lead in the electric vehicle industry.
Tesla may be the world’s most valuable automaker, but it’s far from the largest, with production capacity only a fraction of that of the German, American, Japanese and South Korean automakers. Tesla produced less than 500,000 vehicles last year, compared with 9.3 million for Volkswagen.
While Tesla’s Shanghai Gigafactory is a great addition to its Fremont, California factory, Tesla wouldn’t be able to achieve its horsepower without the Berlin Gigafactory and a second U.S. automaker under construction near Austin, Texas. The ambitious goal of producing millions of electric cars a year has long been emphasized by Skek.
Garrett Nelson, senior equity analyst at market research firm CFRA Research, said: “Because the Shanghai Gigafactory is being built at an incredible rate, they may have misestimated how quickly the Berlin factory will be built and operational, and maybe not. Totally taking into account the significant differences between the two.” Nelson added that the construction of the Berlin factory also comes at a time when the epidemic has caused logistics and supply chain problems. “Tesla is doing everything possible to move forward with the plan, but the reality is that the start of Gigafactory Berlin could be delayed until early 2022.”
To reassure investors and analysts, Tesla said in its April 26 financial report that “the Texas and Berlin plants are progressing well.” But reports say Musk recently endorsed claims that construction of the factory would be delayed by several months.
Musk once said on the earnings call: “We expect limited initial production at these factories this year, and large-scale production at the Texas and Berlin Gigafactories next year.” But this Monday unexpectedly visited Glenhead. During the construction site, Musk said, “I think it might be better to have less bureaucracy.”
According to reports, Musk said frankly at the time, “Some rules should be removed in some positive way. Otherwise, there will be more and more rules over time, and eventually nothing will be done.”
Analysts have adjusted their forecasts for Tesla to reflect a trend of slower progress. “Gigafactory Berlin will be the story of early 2022,” said Wedbush equity analyst Dan Ives. “The timeline is still uncertain given the red tape in Europe. But the Berlin Gigafactory needs to be operational by March 2022, otherwise it will affect Tesla’s capacity targets.”
As a global auto manufacturing powerhouse, Germany’s strong local component supply base and high-quality manufacturing process attracted Musk, which led to the location of Tesla’s European factory. Musk has also considered the UK. But it turned out that the uncertainty brought about by Brexit was too great. Previously, Tesla not only promoted electric vehicles to the German market, but also acquired a local German company Grohmann Engineering in 2016 and renamed it Tesla Grohmann Automation (Tesla Grohmann Automation). , which has the meaning of establishing a beachhead in Germany. German automakers are actively working to close the gap with Tesla in the field of electric vehicles. Tesla plans to gain a foothold in Germany and compete head-to-head, which is one of the reasons for building a local factory. Announcing the project in 2019, German Economy Minister Peter Altmaier said Tesla’s decision to “build a highly modern electric vehicle factory in Germany further confirms the attractiveness of Germany’s automotive manufacturing base. “.
Analyst Schmidt said Musk might “question whether a ‘Made in Germany’ stamp on the bottom of every car coming off the assembly line is worth the money” given his troubles.
Glen Heide is located in the eastern German state of Brandenburg, and its economy lags behind the rest of Germany. The local government is excited about the prospect that the Tesla project will bring thousands of jobs and prestige to the region. “Now thanks to the Tesla project, the entire region can look forward to new growth opportunities that will allow Glenhead to have a global presence,” said Pamela Eichmann, chairwoman of Glenhead Local Council. .
While the local government is excited about the plant’s launch, others may not be supportive. The factory is located between the A10 motorway and the Fangschleuse train station, less than ten kilometers from the Löcknitztal nature reserve. The Löcknitztal Nature Reserve has been under protection since 1984 and was also registered as a Fauna-Plant Habitat (FFH) in 1998. Glenhead means “green wasteland” in German.
Tesla’s Berlin Gigafactory project has also come under scrutiny for possible labor law violations during construction, and could be fined for installing sewage pipes without permission.
Tesla’s Berlin Gigafactory covers an area of 300 hectares. The first step in the preparatory work is to cut down more than 2,000 acres of forest, which is ironic for Tesla, whose motto is “accelerating the world’s transition to sustainable energy.”
In early 2020, local environmentalists blocked Tesla from cutting down trees, but the company immediately obtained court approval to cut down 92 hectares and then 82.8 hectares. Musk downplayed the quality of the trees he fell, tweeting in January 2020: “This is not a natural forest, it’s an economic forest for paper. And the Berlin Gigafactory will only affect a small percentage of it.” Ra also pledged to plant three times as many trees as felled. But scientists generally warn that planting new trees is inferior to existing trees in terms of carbon neutrality. Local environmental groups are also concerned that deforestation will have a negative impact on animals living in the forest.
In addition to felling trees, preparatory work at the factory included relocating bats living in the forest and removing seven unexploded bombs dropped during World War II.
Water usage at Tesla’s Berlin Gigafactory and its impact on the region are also a concern for local environmentalists. The German Union for the Conservation of Nature and Biodiversity (NABU) is one of the oldest and largest non-profit environmental organizations in Germany and a major opponent of the Tesla factory. Christiane Schroeder, managing director of the agency’s Brandenburg branch, said: “Most of the plant is in a drinking water reserve, and the entire plant and two nature reserves are also within easy reach. It is well known that , nature reserves are very sensitive to changes in the groundwater level.”
Tesla also installed sewer pipes without permission, much to the ire of the local water department. Construction of the Tesla factory was briefly halted and granted permission to continue construction on April 12 this year, but could still face fines, the Brandenburg Ministry of Agriculture, Environment and Climate Protection said. Separately, several local agencies, including the Brandenburg State Office for Occupational Safety, are reportedly investigating whether Tesla violated regulations on minimum wages, working hours, working conditions, and more during the construction of the factory. laws and regulations.
Schmidt said the Berlin Gigafactory will not be operational until all necessary permits have been obtained. This process is bound to be troublesome.
IG Metall, Germany’s largest union, initially welcomed Tesla’s plans to build a gigafactory there. IG Metall had previously tried to unionize at Tesla Grossman Automation, but the latter thwarted IG Metall by raising wages. Union president Joerg Hofmann said this month that the union still intends to set up a works council at the Berlin Gigafactory.
This is bound to be opposed by Musk. It has been working to prevent the UAW from breaking into Tesla’s Fremont, California factory. A 2019 ruling ordered Musk to delete a 2018 tweet about discouraging workers at the Fremont, Calif., factory from unionizing. But Musk ignored it.
IG Metall is currently awaiting operational details of the Berlin Gigafactory to see if Tesla intends to comply with local German regulations on wages and working conditions. “We are looking at Tesla’s labor standards in the long term,” said Birgit Dietze, regional head of IG Metall.
Tesla owner, auto analyst Michael? Dunne (Michael Dunne) believes that the rapid commissioning of Tesla’s Shanghai Gigafactory has led to its too fast action in Germany. Dunn’s market consultancy, ZoZo Go, works with auto and parts makers across Asia. “I think Tesla would think, ‘We’ve fixed everything in less than a year. Surely the Berlin plant can do the same!’” Dunn stressed, but that’s not the case with Tesla in Germany.
Schroeder, an environmentalist, believes that “Musk is more concerned with his own business and new technologies than really working on climate change.” “He sees a good opportunity to ‘components of the solution to climate change’ Selling his invention without realizing that he was actually creating new problems.”
In retrospect, it might have been better for Musk to build factories in other EU countries, analyst Schmidt said. “Maybe they’re starting to ask themselves if they should really look at places like Poland or the Czech Republic,” he said. “Porsche decided to build the Cayenne in Slovakia.” (Jiaohan)
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