Tesla CEO Musk delivers first cars from new German gigfactory

GRUENHEIDE, Germany (Reuters) – Elon Musk oversaw the delivery of the first German-made Tesla cars to customers at the 5 billion-euro ($5.5 billion) Gruenheide plant on Tuesday, marking the start of the US company’s inaugural European hub. And the largest investment in the German automobile industry in recent history.

The 30 customers and their families greeted their cars at the site through a neon-lit Tesla exit, gathering around it as Musk arrives.

“This is a great day for the plant,” Musk said, calling it “another step toward a sustainable future.”

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Chancellor Olaf Schultz, who also attended, hailed the plant as a sign of progress and the future of the auto industry.

Not everyone is supportive of Tesla, however, as environmental groups gathered outside the factory on Tuesday carrying signs, pots and utensils to express their concerns, from the high use of water from the factory to trees felled to build it. Read more

Musk had hoped to start production from the plant eight months ago, but local authorities in Germany said it was still being completed relatively quickly despite licensing delays.

Tesla received the final green light from local authorities on March 4 to start production, provided it meets several conditions, which cover issues such as water use and air pollution control.

“Some people don’t trust Germany can do it,” Regional Finance Minister Jörg Steinbach told RBB radio, adding, “We’ve shown the world.” Read more

Racing with Volkswagen

Select Tesla customers will get a Model Y Performance configuration, a vehicle that costs 63,990 euros ($70,491.38) with a range of 514 kilometers (320 miles), the company said, adding that new orders could be delivered from the factory from April.

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Tesla said about 3,500 of the plant’s expected 12,000 workers have been hired so far.

The licensing delay meant that Tesla had to service earlier European orders from its Shanghai factory, driving up costs.

“Makes a huge difference in the efficiency of capital to localize production within the continent,” Musk wrote on Twitter.

At full capacity, the plant will produce 500,000 cars a year, more than the 450,000 battery-electric cars produced by German rival Volkswagen. (VOWG_p.DE) Sold globally in 2021.

It will also generate 50 GWh of battery power, surpassing all other factories in Germany.

For now, Volkswagen still holds the inside track in the race to electrify fleet Europe, with a 25% market share versus Tesla’s 13%. Musk said it would take more time to ramp up production than the two years it took to build the plant. Read more

JPMorgan predicts that Gruenheide will produce about 54,000 vehicles in 2022, rising to 280,000 in 2023 and 500,000 by 2025.

Volkswagen, which has already received 95,000 electric car orders in Europe this year, plans to set up a new €2 billion electric vehicle plant along with the Wolfsburg plant and six battery plants across Europe.

But its schedule lags behind Tesla, with an EV plant to open in 2026 and its first battery plant in 2023.

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(Reporting by Victoria Waldersi and Nadine Shamroshik) Editing by Jan Harvey, Edmund Blair, Alexander Smith and Alex Richardson

Our criteria: Thomson Reuters Trust Principles.

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