Berlin isn’t known as a car city, but it does have a vigorous tech scene and Tesla isn’t so much a car company as a tech one. But it’s also reasonable from other points of view.
Musk, who has spent some time deciding on a European factory location, has decided on Gruenheide in Brandenburg, the German state that surrounds Berlin, and the research facility is to be located near Berlin’s yet-to-open new international airport.
That the new factory should be in Germany is logical. Germany is one of Europe’s biggest market for electric vehicles and the one with the biggest potential. Germany is Europe’s most populous country, Germans are in love with cars and worried about the environment, as evidenced by the recent electoral successes of the Greens.
It also matters that Germany is a country with some of Europe’s strongest incentives for electric car buyers. It recently decided to increase the maximum subsidy for buyers of battery vehicles to $6,600 from $4,400 and extend it until 2025. France, Italy and Slovenia offer roughly as much.
One could regard Musk’s move as a cheeky foray into the land of its top competitors. Volkswagen AG has launched an all-out electrification strategy that pits it directly against Musk’s mass-market hope, the Model 3 (which apparently won’t be made at the new Berlin factory, at least to start with). In September, the German giant launched the ID.3, the first car on its new platform meant for electric vehicles. Berlin is flooded with electric Golfs that VW made available this year for WeShare, the company’s nascent car-sharing operation. And even before VW starts turning out tens of thousands of cars especially developed as EVs, the e-Golf is already among the Model 3’s strong competitors in Germany, along with Bayerische Motorenwerke AG’s somewhat clunkier i3 and some other European electric cars.
But then, it makes sense to keep close to the competition, work with the same suppliers and be able to poach star managers, engineers and designers. Tesla isn’t the cheeky challenger here — the German automakers are, when it comes to EVs. Musk, in a sense, is buying insurance against being overtaken technologically.
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