SpaceX founder and Tesla CEO Elon Musk looks on as he visits the construction site of Tesla's gigafactory in Gruenheide, near Berlin, Germany, May 17, 2021.
Credit: REUTERS/Michele Tantussi
Elon Musk’s early vision for Tesla’s gigafactory in Berlin was typically outlandish.
Brimming with confidence, the world’s second richest man promised to build a “mega rave cave” beneath the car factory “with an epic sound system and woofers the size of a car.”
It would be Tesla’s first gigafactory in Europe and its fourth overall, after sites built in Nevada, New York and Shanghai.
But progress at the $7bn (£5.8bn) site in the German municipality of Gruenheide has so far been painfully slow.
Its opening was originally planned for this Thursday July 1, but the first electric crossover is unlikely to run off the assembly line in Germany until early 2022 at the earliest.
“Musk has often been quoted saying that Tesla’s Model 3 had production hell problems,” says Matthias Schmidt, an independent Berlin-based car analyst.
“In Germany, it is ‘welcome to bureaucratic hell’”.
The construction site of the future Tesla Gigafactory in Gruenheide
Credit: REUTERS/Hannibal Hanschke
While the country has been praised for efficiency, its planning processes can be Kafkaesque. A new airport for Berlin, only a few miles from Tesla’s plant, opened eight years late, and 29 years after planning started, at a cost of €7bn.
Musk now fears he will suffer the same fate. So far, Tesla has been forced to work using preliminary construction permits, and has been waiting 20 months to get full approval.
The billionaire has been vocal about his frustrations with the planning process. In May, he told reporters that planning rules in Germany were “immortal” and that they “just accumulate until eventually you can’t do anything”.
In April, Tesla wrote to a German court over its construction permits saying it had “learned firsthand that obstacles in Germany’s approval processes are slowing down the necessary industrial transformation”.
But planning permission and red tape haven’t been the only obstacles. In November 2019, Musk surprised attendees at an awards ceremony by revealing that Berlin had been picked for its new factory. “Berlin rocks,” he said, telling Auto Express that Tesla had turned down a site in Britain. “Brexit made it too risky to put a Gigafactory in the UK.”
Local residents have been campaigning against the gigafactory, claiming the construction work is damaging the local ecosystem
Credit: REUTERS/Hannibal Hanschke
As local politicians celebrated in Berlin and Brandenberg, in the villages dotted through the postcard pine forests that surround the site, locals were outraged.
By January, picket lines were forming near the village of Gruenheide, accusing Tesla of “stealing our water”. Musk may have expected environmental groups to support a new electric vehicle factory, but opposition has been intense.
“They have been sandbagging Tesla’s plans by saying it is not built to the right green standards,” Schmidt says.
Green groups Nabu, GruneLiga Brandenburg and local opposition from the Grunheide Citizen’s Initiative have all complained about the site, which partly overlaps a drinking water protection zone and borders on a nature reserve.
“Thousands of hectares of forest will be cleared to create the needed infrastructure and housing space,” says Manuela Hoyer, who is a member of a local campaign opposed to it.
“To build such a plant in a protected drinking water area is actually a crime against the environment.”
In December last year, Tesla was forced to halt the felling of 205 acres of pine trees twice over concerns for the welfare of hibernating smooth snakes and sand lizards, despite efforts by the carmaker to relocate the wildlife.
On June 16, the groups submitted fresh injunctions against new Tesla planning applications.
More worrying than the peaceful protests was a fire, started by a radical left-wing group. “Tesla is neither green, ecological nor social,” the group wrote online. “Our fire stands against the lie of the green automobile.”
Philippe Houchois, an analyst at Jefferies, says Tesla appears to have been caught off guard by the level of opposition after its success with a gigafactory in China.
“In Germany, the reality is more complex. It is a democracy where people can oppose planning.”
Tesla has also not helped itself by making several alterations to its planning proposals. Its construction plans had to be fully resubmitted earlier this month to reflect the addition of battery cell production to the site, costing valuable months.
The Gruenheide plant comprises several units to handle component manufacturing and final vehicle assembly, including a press shop, foundry and body production.
It also includes a water recycling facility, a local fire brigade as well as a depot to ensure more efficient transport of components and other goods. Under the plans, the site’s power needs are to be met via local renewable energy sources.
But adding battery cell production meant the company had to tweak and refile the whole application. Based on the most recent version, the plant will have the capacity to produce 500 million cells totalling 50 gigawatt hours (GWh) a year.
The Tesla gigafactory in Shanghai, China.
Credit: Qilai Shen/Bloomberg
Despite the delays, Brandenburg state minister Jorg Steinbach said he was hoping for “the biggest Christmas present” of completing the plant this year.
Analysts are not as optimistic. Tesla still doesn’t have final approval for its battery facility at the plant, says Sandy Fitzpatrick of analyst firm Canalys, “meaning a further delay is likely to stretch well into 2022 or even as late as early 2023”. Tesla did not respond to requests for comment.
Even after it secures approval, Musk will be forced to confront another pet hate: unions.
With 12,000 workers planned for its Gigafactory, Germany’s largest workers union, IG Metall, is eyeing setting up a workers council.
In Britain, regional leaders have used the struggles of Berlin’s gigafactory as an issue to press home on the advantages they believe their regions could offer against the Berlin-Brandenburg site.
In December, Tees Valley mayor Ben Houchen wrote to Tesla to urge the company to the North East and joked on Twitter about the delays in Germany.
“When it comes to building an electric car plant and associated battery factory there is no better place to do it than Teeside,” Houchen says.
“If anyone needs evidence of this, we recently secured planning permission for a 4.5 million sq ft state-of-the-art manufacturing space – the largest planning application in the north of England – in just four months without a single objection.”
UK government ministers and local politicians have been appealing to the Tesla boss to build a new gigafactory in Britain
Credit: REUTERS/Michele Tantussi
Despite the positive noises from the North East, Tesla has yet to confirm the site for its next gigafactory.
So far, it has seemed content with expanding its current facilities and increasing their efficiency to boost its output, although recently it put a halt to buying up new land in Shanghai. Gigafactory 5 is already in the works in Texas.
Houchois, of Jefferies, thinks Europe could still be the logical location for Tesla to expand after Texas. “They need to grow market share in Europe and that is where a lot of the market is,” he says.
Musk recently teased the possibility of a Russian gigafactory, but the prospect seems remote in a market with a mere 10,000 EVs nationwide.
Schmidt thinks it will be tough for the UK to convince Tesla to pick Britain, arguing it may have missed its chance. “The UK would have been the best fit for Tesla pre-Brexit,” he says, “I think Brexit torpedoed that. The UK Government would have offered favourable conditions, but it was at exactly the wrong time.”
While Musk has bristled at the application process, he has also used Twitter to attempt to remain on good terms with German officials. In a reply to Steinbach, the Brandenburg minister, he said: “I know this is a large and complex project… when all the finishing touches are done, I hope it will be considered the jewel of Brandenburg.”
Still, the billionaire is unlikely to forget his bust up in Berlin any time soon.