Tesla to Build Factory in Germany

Germany is celebrating Tesla's decision to build its first European factory in the country. The decision came just days after German officials said they would increase government assistance for buyers of electric cars.

Tesla Chief Executive Officer Elon Musk announced the move in the German capital Tuesday night. He added that "we've decided to put the Tesla Gigafactory Europe in the Berlin area."

The company will also set up an engineering and design center in Berlin, Musk said. He noted that the new factory "will build batteries, powertrains & vehicles, starting with Model Y." His comments appeared on the American social networking service Twitter.

The Model Y is a small sports utility vehicle that Tesla plans to start selling in the autumn of 2020. The car can travel up to 370 kilometers with each electric charge. The starting price will be 35,400 euros.

Musk told the industry website Auto Express that he had ruled out Britain as the site for the factory because of British plans to leave the European Union. Those plans, often called Brexit, have created economic uncertainty for many large companies.

German Economy Minister Peter Altmaier called Musk's announcement a "success" for the country's ability to grow its automobile industry.

Altmaier said there had been competition for the factory from other European countries, but he denied that the government had offered any financial support to Tesla.

"So far, subsidies haven't been discussed," he told reporters in Berlin. "It's clear that Tesla will be treated the same way as all other automobile companies if it invests in Germany and creates jobs here."

The mayor of Berlin, Ramona Pop, said the factory could create 6,000 to 7,000 jobs in manufacturing and thousands more in design and research.

Tesla's decision comes a week after German officials and auto industry leaders agreed to increase government aid to buyers of electric cars by 50 percent. The paybacks are available to those who buy a vehicle that costs 40,000 Euros or less.

The subsidy for buyers will be extended from the end of 2020 currently to the end of 2025. The government and industry agreed to build 50,000 electric charging stations nationwide by 2022.

Musk said that the plan is for the factory to be built near Berlin's new airport. It will be just outside the city limits in the neighboring state of Brandenburg. The airport is supposed to open next year after many years of delays.

"We definitely need to move faster than the airport, that's for sure," Musk said.

While Germany is home to some of the world's biggest automakers, it has been overtaken by the United States, China and some European neighbors in the use of electric vehicles.

In July, Tesla announced plans to build its third Gigafactory in Shanghai. That will be its first production center outside of the United States.

German automaker Volkswagen welcomed Tesla's decision to build the factory in its country. Last week, Volkswagen began mass manufacturing its ID3 electric car.

"I'm happy that Elon is, let's say, pulling us, but I think the German industry is really now strongly investing," said Volkswagen's chief executive officer Herbert Diess.

Auto industry expert Ferdinand Dudenhoeffer said more competition could help German automakers.

"This is good news for Volkswagen, Daimler and BMW," said Dudenhoeffer.

I'm Susan Shand.

Words in This Story

subsidy – n. financial assistance

gigafactory – n. a very large factory

battery – n a power source with electricity

site – n. a piece of ground occupied by a building or buildings

uncertainty – n. the condition of being unsure