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Elon vs. nature: Tesla is building its new Berlin factory on an endangered reptile habitat—will it matter?

February 2, 2021, 11:30 AM UTC

In late 2019, talks were brewing in Berlin over a multibillion-dollar deal so secret it needed its own code name—one that evoked the cloak-and-dagger espionage of the city’s old Communist days: Project Anushka. “Everyone thought it must be related to Russia,” says Axel Vogel, Minister of the Environment for the state of Brandenburg.

As it turned out, no Russians were involved. Instead, in November of that year, Germans finally learned who was behind the biggest investment the country had seen in decades: none other than Elon Musk

“We’ll see you more often in Berlin,” Musk gushed that November night as he took the stage to accept an industry award, and then stunned the audience by announcing a massive new factory in the city. “I love Berlin. It’s great!”

Project Anushka was a reference to an old Soviet biplane in which German officials had whisked the Tesla CEO over the proposed site for the company’s newest Gigafactory. The flyover was an edgy, stylish touch aimed at winning over an exec known for his edgy style. “Giga Berlin” as Musk calls the factory, will be the living embodiment of that persona. “It will be cool and fun,” he told Fortune in a long interview in late January, wherein he laid out his vision for a huge push into Europe. “I’m aiming to have it be a real gem.” 

Read more: Exclusive: Elon Musk says Tesla’s giant Berlin factory will be ‘fun and cool’—free of reptiles, bats, and maybe unions, too

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GO BIG OR GO HOME: Tesla’s massive new Gigafactory going up in Grünheide, Germany, sprawls over more than 4.8 million square feet.
Liesa Johannssen-Koppitz—Bloomberg/Getty Images

German officials had strong motivation for wooing Musk: His plan is epic. In a largely forgotten area of former East Germany, about 20 miles from the capital, Musk is racing to finish a vast facility capable of turning out, beginning as early as this summer, European-built Teslas—at a pace he expects will reach 500,000 cars a year by 2023. Musk also plans to add a battery factory that will be “the biggest by far in Europe, and one of the biggest in the world,” he says.

No less important is the flood of new jobs the factory will bring to the region, beginning with “at least 20,000 people,” he says, and rising over time to about 50,000 hires.

But as Musk has learned, the smallest of details can complicate the biggest of deals—and trip up even a man who has sent rockets (and his company’s stock price) into the stratosphere. 

As construction began on the factory last June, many living nearby expressed huge excitement that one of the world’s most valuable companies had handpicked their backyard to launch its big move into Europe.

Yet not all locals were thrilled. Public hearings in October drew angry testimony, with a transcript that runs to 1,233 pages. Tesla’s fourth factory, after California, Nevada, and Shanghai, sits on 750 acres in Grünheide, an exurb of Berlin with a population of 9,000, amid pine trees local authorities planted in the 1940s, hoping to sell them as lumber. Vogel says the area is now home to “people who want to spend quiet retirement or raise their children in natural areas,” many of whom feel their lifestyle is “threatened” by Tesla’s arrival.

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MUSK’S WILD LIFE: An endangered sand lizard.
Nicolas Armer—picture alliance/Getty Images

But the greater threat has been to creatures far less visible: two endangered species, the sand lizard and the smooth snake. For decades, the animals have burrowed in the woodlands around Grünheide, an increasingly precious respite from the encroaching human world. Immediately after Musk’s 2019 announcement, environmental groups sued Tesla for endangering the reptiles, as well as the rare western barbastelle bat. All are protected under strict nature conservation laws, which prohibit construction that might harm listed wildlife. Musk admits he was amazed there were reptiles on the site. “I think this is not a fun place for a snake or lizard,” he says. “They will be very, very cold. Frozen!” 

In February of last year, a court order mandated that Tesla suspend building until it had a plan to save the wildlife on the land and relocate the lizards and snakes. Tesla offered to plant three times the number of trees it was planning to obliterate, but the legal challenges persisted. In December Tesla was twice ordered by judges to stop felling trees, because it could kill reptiles still alive on the site. As of late January, work was continuing. 

For all the controversy, there appears to be no stopping Tesla’s Gigafactory. “The total investment is very, very substantial,” Musk says. “And we will continue for quite some time.” Tesla’s building application estimated the factory construction would cost a billion euros. And for politicians, the influx of new jobs is crucial for a region that suffered a disastrous brain drain after the collapse of Communism. “Almost a whole generation left from East to West,” Brandenburg’s Economic Affairs Minister Jörg Steinbach tells me. Thanks in part to Tesla’s arrival, he says, “we are turning the wheel around 180 degrees.” Musk says he intends to make the factory a tourist site, a “beautiful” tech showcase heavily powered by wind and solar. Being on the edge of Berlin is crucial, he says, to luring thousands of top engineers: “We are recruiting from across Europe.”  

But to environmentalists, officials have simply traded nature for business interests. “They saw all the advantages and ignored all the disadvantages,” says Christiane Schröder, managing director in Brandenburg for the Nature and Biodiversity Conservation Union, one of the organizations that sued Tesla for endangering the animals. 

Rescuing the reptiles from Tesla’s bulldozers has required months of painstaking planning. “It is very, very difficult,” says Jens Frayer, a professional lizard catcher for German conservation company Natur und Text, which is searching for animals living on the company’s land. 

Even in the best of times, Germany’s indigenous Coronella austriaca snakes and Lacerta agilis lizards wage an all-out battle against the elements. Those that survive the cold, wet weather are often eaten by crows; an eight-year life span is rare. These are hardly the best of times. As Tesla began its frenzied build-out, so Frayer scrambled to save the reptiles, a task he says requires immense patience and well-honed skills. “Both the snakes and the lizards have camouflage,” he says. “First we have to train people to see them. And then we have to train people to catch them.”

The railway tracks on Tesla’s land, which sit atop piles of small rocks, are a favorite and frustratingly effective hiding place for the creatures. “The snakes can hear and feel when you’re near,” Frayer says. “You will never see them.” In the end, the team built black plastic boards to soak up the sun, coaxing the animals out as they searched for warmth. After 28 days of work, the team of four trackers caught just 17 lizards and 14 snakes.

Dozens are still hiding. “We don’t know how many are still there,” Frayer says. “We will have to continue in the spring.”

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Musk holds court with journalists outside the Gigafactory site in September 2020.
Patrick Pleul—picture alliance/Getty Images

By then, Musk says, the factory will be almost ready to roll out its first German Teslas—engaging in its own high-stakes battle against the country’s cherished auto industry. German automakers, including BMW, Daimler, and Volkswagen, together produce about 5 million vehicles a year and hire more than 800,000 people, representing the country’s single biggest industry.

Taking on that entrenched powerhouse will not be easy, even for Musk. 

So far, Tesla has benefited from the slowness of German competitors to electrify their fleets en masse. But in 2020, Volkswagen finally sold more battery-powered vehicles in Europe than its upstart competitor. While Tesla’s software capabilities remain superior, the Germans have spent decades building out giant factories and delivery systems, which Tesla is now creating there from scratch. What’s more, the old-style automakers are under increasing EU pressure to shift away from fossil fuel. “Tesla did a terrific job entering the EU market, but it was against an empty playing field,” says Matthias Schmidt, an industry analyst in Berlin. “Now they have much greater competition.”

Musk insists he is delighted by the growing rivalry. “The mission of Tesla is and always has been to accelerate sustainable energy,” he says. Even so, to maintain its position as the world’s leading electric-car maker (now controlling about 18% of the global market), Tesla will need to win in Europe. Musk believes that long-term success requires a stronghold in North America, China, and Europe. Without all three, he says, “you simply cannot achieve economies of scale.” 

Tesla entered the EU against an empty playing field. Now the company has competition.

Matthias Schmidt, Berlin-based industry analyst

Also ahead are likely battles with the powerful auto unions. Under German law, union officials occupy seats on auto companies’ supervisory boards—a jolting contrast from the U.S., where Tesla has fought off workers’ attempts to unionize. 

Musk seems reluctant to change his stance at Giga Berlin. He says workers would want to unionize “only if we are doing something wrong and I am not properly seeing to their needs.” Birgit Dietze, Brandenburg director for the IG Metall industrial union, which has 2.4 million members, says she expects Tesla to abide by Germany’s labor laws, including a minimum of 24 vacation days a year and guaranteed overtime pay. 

For all that, Musk sees a key opportunity in the EU’s single market of about 450 million people. He says he will also open a car-design center in Berlin, tapping into the country’s deep experience. “The best cars are made in Germany. Everyone knows that,” he told the Berlin audience that night in 2019. He went on to recall the skepticism when Tesla launched in 2003 as the world’s first maker of all-electric cars. “Everyone thought we were huge fools,” he said, laughing. “I thought we were fools too, frankly.”

Today, no one is laughing. Beginning this summer, sleepy Grünheide will bring another huge expansion to Tesla. Less clear is whether the lizards and snakes will fare as well.

Correction: Because of an editing error, a previous version of this story misidentified the state of Brandenburg as home to Berlin. The city is located within it, as a separate city-state.

This article appears in the February/March 2021 issue of Fortune with the headline “Cold-Blooded.”