The Tesla Model Y will be built in Germany.
The Tesla Model Y will be built in Germany.
The Tesla Model Y will be built in Germany.
The Tesla Model Y will be built in Germany.

BERLIN, GERMANY - US electric vehicle pioneer Tesla will build its first European factory and design centre near Berlin to produce cars "Made in Germany" as it seeks to burnish its reputation for reliability and sporting prowess.

Tesla chief Elon Musk made the announcement at a prestigious German car awards ceremony late on Tuesday and said its European gigafactory would make batteries, powertrains and vehicles - starting with its Model Y SUV.

Tesla's move into Europe comes at a challenging time for the Silicon Valley trailblazer which is investing heavily in new factories and new products such as a pickup truck, but the company has yet to prove it can be consistently profitable.

Tesla's plan to start production in another continent comes at a time the motor industry is struggling with export restrictions in the form of trade tariffs. Tesla is also opening a factory in Shanghai, built with Chinese state support.

While Tesla will be taking on BMW, Mercedes and Volkswagen on their home turf as they start rolling out zero-emission vehicles, the move fits with the German government's plan to transform the country into a centre of excellence for electric mobility.

"Tesla's decision to build an ultramodern factory for electric cars in Germany is further proof of the appeal of Germany as an automotive hub," Economy Minister Peter Altmaier said in a statement on Wednesday.

Lobbied hard

While Germany's renowned car industry is mainly based in the south of Europe's biggest economy, the capital has become a hub for start-ups and has attracted many creative and technology firms since the fall of the Berlin Wall three decades ago.

Making his announcement at Germany's Golden Steering Awards, in Berlin, Musk said the factory would be near the city's new Brandenburg international airport.

Musk said in June last year that Germany was the frontrunner for Tesla's first plant in Europe and the company announced last month that it expected to start production in Europe in 2021.

"Tesla is coming to Brandenburg with a big investment," Dietmar Woidke, premier of Brandenburg state, which surrounds Berlin, said in a statement. "We lobbied for this for a long time in intensive talks and with good arguments."

Tesla has started hiring for the German project, according to job postings on its website which showed the carmaker was looking to fill four roles from engineering to construction.

Berlin's minister in charge of economic affairs, Ramona Pop, told public broadcaster RBB there had been talks about creating 6000 to 7000 jobs in production alone, with hundreds or even thousands more in areas such as design, software or research.

Musk's appearance at the awards ceremony is another example of Tesla's efforts to give its cars the German stamp of quality.

It already has an engineering firm in Pruem that specializes in automated manufacturing systems for battery factories and has tested its cars on the Nordschleife, the notorious northern loop of the Nuerburgring racing track. 

Reuters