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Industrial Policy

Tesla’s Berlin Gigafactory gets green light

BERLIN — Tesla on Friday secured final approval for its Gigafactory plant just outside Berlin, setting the stage for fierce competition with European carmakers for the fast-growing battery-powered car market.

The project has been beset by delays since it was launched in 2019, partly linked to opposition from green groups concerned about the factory’s environmental impact. The decision ends uncertainty around its fate; it was built on 19 temporary permits.

“This approval process was a mammoth task,” Dietmar Woidke, premier of Brandenburg, where the plant is located, said in a statement. He noted the final permit is 537 pages long with several thousand pages of appendices.

The decision is “a little ray of sunshine in challenging times,” he told reporters on Friday.

So far, only 2,000 EVs have been made at the plant as part of a pilot program, but Tesla is aiming to build up to 500,000 units there each year.

Those plans have prompted German carmakers to step up their own clean car ambitions. Volkswagen, BMW and Mercedes Benz are investing in battery research to head off the challenge. On Friday Volkswagen, which has already pledged to spend €89 billion on EVs, announced it will invest €2 billion to build a factory for its new Trinity electric car near its Wolfsburg HQ.

Although German car executives publicly welcome the Tesla challenge, privately many expect a tough battle. Tesla’s Model 3 was the most popular electric car model in Germany last year.

“I expect Tesla to be as big as BMW in Germany in two or three years, and to overtake Mercedes by 2025,” said Ferdinand Dudenhöffer, a professor at the Center for Automotive Research in Duisburg. 

Tesla is also well placed to make the most of Europe’s push to speed up its green transition thanks to Russia’s invasion of Ukraine. “With geopolitical situations likely creating an even quicker shift to EVs, Tesla are now ready to fill that void,” said Matthias Schmidt, an industry analyst in Berlin.

But Tesla still faces a number of challenges. Some NGOs are still fiercely opposed and the company could face legal challenges on environmental grounds.

Scaling up production will also take time, according to Tesla boss Elon Musk. “The hard part is reaching volume production,” he said during an October visit to the factory.

Attracting workers poses another challenge — the plant needs 12,000 but only has 3,000 on contract.

Before Tesla can start production, it will have to prove it has met all the permit’s requirements, including installing devices to measure air pollution and ensuring the factory has emergency plans in place. The carmaker said it would provide the evidence within two weeks.

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