After conquering North America and Asia, Tesla’s CEO Elon Musk has shifted his attention to Europe, hoping also to win competition with rival European EV companies.
Musk was at the inauguration of Tesla’s German gigafactory on Tuesday, where new Tesla models were unveiled to the excitement of clients.
Reuters reported that Musk was cheered as he oversaw the handover of Tesla’s first German-made cars at its Gruenheide plant on Tuesday, marking the start of the U.S. automaker’s inaugural European hub just two years after it was first announced.
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Loud music played as 30 clients and their families got a first glimpse of their shining new vehicles through a glitzy, neon-lit Tesla branded tunnel, clapping and cheering as Tesla Chief Executive Musk danced and joked with fans.
“This is a great day for the factory,” Musk said, describing it as “another step in the direction of a sustainable future”.
Europe is a top destination in Musk’s bid to make Tesla a global auto brand, a bid which was limited by lack of a Tesla factory in the region. But there has been opposition.
Per Reuters, German Chancellor Olaf Scholz, who was also at the event and lauded the gigafactory as the future of the car industry, witnessed some environmental activists block the factory’s entrance in protest over the factory’s high water use.
The European Union takes environmental concerns seriously and the gigafactory was caught up in a series of it. Musk’s hope to begin output from the factory mid-last year was thus delayed due to licensing issues bordering on environmental concerns.
Until March 4, when it got approval from local authorities to begin production under stipulated conditions that addressed the environmental concerns, Tesla was forced to service European orders from Shanghai.
The delay in getting production approval for the German plant was compounded by global chip shortage and other supply chain disruptions, forcing Tesla to increase the cost of its vehicles.
However, the new Tesla plant means German-based auto companies, especially Volkswagen, making a shift to electric vehicles now have a major challenger in their backyard.
On Tuesday, new German owners received the Model Y Performance configuration, a vehicle costing 63,990 euros ($70,491) with a 514 km (320 miles) range, Tesla said, adding that new orders from the plant could be delivered from April. Tesla said that around 3,500 of the plant’s expected 12,000 workers have been hired so far.
Reuters reported that at full capacity, the plant will produce 500,000 cars a year, more than the 450,000 battery-electric vehicles that German rival Volkswagen sold globally in 2021.
It will also generate 50 gigawatt hours (GWh) of battery power, surpassing all other plants in Germany.
For now, Volkswagen still has the inside track in the race to electrify Europe’s fleet, with a 25% market share to Tesla’s 13%. Musk has said ramping up production would take longer than the two years it took to build the plant.
JPMorgan predicted Gruenheide would produce around 54,000 cars in 2022, increasing to 280,000 in 2023 and 500,000 by 2025.
Volkswagen, which has received 95,000 EV orders in Europe this year, is planning a new 2 billion euro EV factory alongside its existing facility in Wolfsburg and six battery plants across Europe.
But its timeline lags Tesla’s, with the EV factory due to open in 2026 and the first battery plant in 2023.