Elon Musk says Tesla’s plans to build its next superfactory near the German capital, Berlin, send a clear message to some of the world’s most prestigious carmakers that Musk is moving into its own territory. Tesla’s chief executive said late Tuesday that the company will also build a superfactory and engineering center near Berlin’s new airport. He made the announcement while accepting the “Golden Wheel” award from the German bild newspaper, the Tesla Model 3.
Musk, 48, is preparing for his next plant, when cars made at Tesla’s Shanghai plant will go on sale.
Tesla’s european presence will clearly increase the risk to established carmakers, which already face a serious threat from the upstarts of electric vehicles. Regulators are increasingly demanding that car companies produce electric cars, even though they are struggling to make a profit.
In a recent report, Morgan Stanley analysts, led by Adam Jonas, wrote that Germany would be a “reasonable choice” for so-called European super factories. Germany is “the center of the global luxury car market, the economy relies on the internal combustion engine technology of traditional cars, and the German government is very concerned about climate change,” Jonas said.
The government of Angela Merkel, Germany’s chancellor, and domestic carmakers have agreed to step up incentives for electric vehicles to boost Germany’s efforts to reduce emissions.
However, producing cars in a country with the world’s highest labor and energy costs, such as Germany, is sure to be a major challenge, especially as European customers are accustomed to traditional car dealerships and repair shops forming a tight network of relationships to handle after-sales.