A dancing Elon Musk celebrates his new German ‘gemstone’ factory set to ease Tesla’s production bottleneck

March 22, 2022, 6:27 PM UTC

Elon Musk danced in front of the cameras and autographed Tesla Model Y sport utility vehicles as he celebrated the start of production at his shiny new factory in Germany. 

Decked out uncharacteristically in a suit and tie to match that of the attending German chancellor, Musk confessed he was “incredibly excited” to hand over the very first cars made at Giga Berlin-Brandenburg just outside the country’s trendy capital. 

“Tesla will make sure that this is a gemstone for the area, for Germany, for Europe, and for the world,” the CEO told guests, packed into a cordoned-off area of the site’s final assembly hall, on Tuesday. 

Musk flew into Germany to personally deliver an initial batch of 30 Model Ys retailing from €56,990 ($62,770) as they exited the tunnel—where cars coming off the line are meticulously checked for flaws under revealing white fluorescent glare.

According to daily tabloid Bild, the first customer to receive his solid black crossover from Musk was a 61-year-old engineer from the southwestern city of Karlsruhe purchasing his fourth Tesla.

The plant, situated in the town of Grünheide, gives Tesla a foothold directly in the European market and serves as a critical escape valve that reduces pressure on Tesla’s two overstretched production plants in California and China. 

“We view the opening of Giga Berlin as one of the biggest strategic endeavors for Tesla over the last decade,” Wedbush tech analyst Dan Ives said on Monday

In the future, every 50 seconds a Model Y should run off the assembly line in Grünheide, the first major plant expansion since Shanghai went online at the end of 2019. (Further relief for Tesla’s production bottlenecks is due to come when its fourth plant, situated in Texas, starts production on April 7.)

While Western European wages are among the highest in the industry, Tesla can respond to demand in Europe more quickly thanks to local production. Logistics costs are also reduced, harmful currency fluctuations neutralized, and the 10% excise tariff for cars imported into the European Union drops away for cars produced in Grünheide, at the very latest once Tesla no longer sources 2170 cylindrical battery cells from China. 

Shares in Tesla rose 2.8% to $947 in trading and reached their highest intraday peak since Jan. 26 as the gloominess surrounding tech stocks dissipated.

The new Giga Berlin-Brandenburg plant, which should feature a mega rave cave, according to Musk, is also a statement to the once dominant trio of German carmakers all now playing catch-up with the industry’s trendsetter.

For Volkswagen Group CEO Herbert Diess and his heavily unionized domestic workforce of nearly 300,000 people, Grünheide represents a direct threat due to new production processes that greatly boost productivity. 

A new assembly hall is now being built at VW’s core site in Wolfsburg, where the flagship model, dubbed “Trinity,” should be built in just 10 hours’ time per vehicle from 2026. 

Standing to the side of Musk at the factory opening, looking on approvingly, was Olaf Scholz. The German chancellor found time on Tuesday to bask in the warm glow of the environmentally conscious jobs creator following weeks of sustained criticism over his country’s dependence on Russian energy.

In the past, Germany also received a lot of flak for seemingly taking forever to certify the construction of the Tesla factory, which had been built at the risk of being torn straight back down again should Musk fail to receive final approval. 

Scholz’s government now aims to end such bureaucratic logjams in the future by slashing in half the time required for the permitting process. 

Speaking to the crowd, Musk slipped into the comfortable role as the billionaire idealist who dreams of saving the planet by ending humanity’s dependence on fossil fuels.

“I really want to assure everyone that you can have hope,” he said, pledging every Tesla purchased from Giga Berlin-Brandenburg would put the planet one step closer to running on clean and sustainable energy. 

“This factory is a major step in that direction, so believe in the future.”

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