- Elon Musk said the company will be opening its new Gigafactory in Germany.
- Manufacturing in Germany is expensive and European car sales are weakening.
- Tesla doesn’t have enough cash to fund its product pipeline.
In typical Elon Musk fashion, the billionaire tech mogul took to Twitter to announce that Tesla will be setting up a Gigafactory in Berlin.
Everyone knows that German engineering is outstanding, for sure. That’s part of the reason why we are locating our Gigafactory Europe in Germany. We are also going to create an engineering and design center in Berlin, because Berlin has some of the best art in the world.
Musk has mastered the art of creating a buzz around his announcements. This is probably the reason why he refers to the Tesla manufacturing plants as Gigafactories despite the fact that there is nothing “Giga” about them. They are just average-sized manufacturing plants. That being said, the Tweet did have the desired effect as the Berlin Gigafactory has been the talk of the Tesla town. However, there are multiple reasons why there’s a good chance a Gigafactory in Berlin may never come to fruition.
Germany Won’t be the Best Location for Tesla
Elon Musk said Brexit uncertainty made it too risky to establish a factory in the UK and instead opted for Germany. Tesla currently operates on the West coast of the U.S. and has to transport cars on the East coast before shipping them to Europe. Opening a factory in Germany will eliminate these transport costs. As a result, the news of the German Gigafactory has been well received among Tesla loyalists.
However, there are other additional costs that have not been taken into consideration. In an elaborate thread on Twitter, ardent Tesla skeptic @Fly4dat who has ~2,200 followers pointed out that no carmaker has opened a manufacturing plant in Germany since 2005.