Tesla’s European Gigafactory Might Be In Germany Or Netherlands

JUL 31 2018 BY MARK KANE 37

Two countries seem to be in the game to secure the European Tesla battery Gigafactory – Netherlands and Germany – recently hinted at by Elon Musk.

Germany: Rhineland-Palatinate

Netherlands is already home to Tesla’s European HQ with a final assembly facility in Tilburg. In the case of Germany, there is Tesla Grohmann Automation company, acquired some time ago. Germany is also the biggest European car market.

Latest news is that Tesla is in talks with authorities in the Netherlands and Germany (Rhineland-Palatinate). Rhineland-Palatinate has an advantage in the form of Grohmann Automation, which would supply production equipment.

The talks in Europe seems less mature than in China, where the Gigafactory 3 is already announced to be built in Shanghai, but there is more general uncertainty (U.S.-China, keeping technology in-house, etc.) on the other hand.

“In a statement to the Wall Street Journal, Ralph Schleimer, a state official from Rhineland Palatinate, Germany, noted that the state is doing what it can to assure Tesla that it is a viable location for the planned facility. Schleimer added that the state had already presented its proposals to Tesla, but any detailed negotiations have not begun yet.

“We have done everything possible to assure that Rhineland Palatinate is in the competition for the plant,” he said.”

There are also other German states (and countries) interested in new investments from Tesla, but only these two seem to be serious at the moment.

The production capacity of the Gigafactory 3 in China is expected to be 500,000 cars and battery packs/cells annually. The size for the factory in Europe remains unknown.

With new battery factories – AESC (Nissan), LG Chem, Samsung SDI, SK Innovation, CALB, Tesla (Panasonic) and some other projects, Europe finally is starting to produce lithium-ion batteries in volume. The only thing is that there is still not a single large-scale European battery manufacturer.

Source: Teslarati

Categories: Tesla

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37 Comments on "Tesla’s European Gigafactory Might Be In Germany Or Netherlands"

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TM3x2 Chris

I’m surprised that Tesla is not looking into Eastern European countries like Poland, Slovakia, Hungary, Romania, or Bulgaria (north to south order). The cost of labor is lower there and these countries are very eager to provide huge tax breaks to entice foreign investment.

Windbourne

THe idea is to continue dropping labor.
Musk would rather pay comparable, but drop the hours.
Smart on his part.

Mark.ca

That’s a nice story and nothing else. He needs workers and cheaper labor is a plus. In addition to that you have plenty of talented engineers and IT to choose from. At this point it’s simply dumb for him to not go east in the union.

G2

Too close to Russia maybe?

Mark.ca

So? Trump is in office…we are best buds now.

Bogdan

not for long…

Pushmi-Pullyu

My guess is that the European Gigafactory will wind up in some country with a low cost for labor. Maybe eastern Europe, or maybe Spain or Greece.

My guess is that Tesla is only talking about Germany to get the other countries to up their ante in trying to attract new business. That’s the game Tesla played in selecting the Nevada location for Gigafactory 1. That was quite successful for Tesla; why wouldn’t they use the same strategy in Europe?

Germany may be the country with the biggest car market, but California is the State with the biggest EV market. Tesla bought its first auto assembly plant in California, but due to high labor costs and pro-union State laws, I seriously doubt they’ll do that again. Germany has the same problem as California in regard to labor relations, or perhaps even more so.

antrik

Not going to do research — but I suspect things like labour laws are mostly harmonised across the EU…

Mark.ca

You should do the research…you will find out just how different the East is.

Bogdan

Going east is not the best solution. Musk plans to do automated assembly. He needs a few skilled workers and load of industrial machines. Germany is best place for that.

Windbourne

” but due to high labor costs and pro-union State laws, “.
Labor costs are not that big of a deal esp. since he is not paying a whole lot, and instead gives options (smart; ).
And the state laws are kind of tricky, but I don’t think that really oppose unions.
OTOH, he DOES oppose unions composed of crocks and cheats that run around setting fires in the building or stealing data or pushing the state to screw over the company.
He has already told the company that if they got up to speed and still wanted a union, they could have it, but it could not be UAW or any of the other organized unions.
Personally, I agree with him.
None of those unions help create Tesla. OTOH, most of the employees DID. If they want their own union, fine.

km

Poland has special econonic zones with lower taxes but I doubt Musk is interested. If they did not build a factory in Mexico they are not going to build one in Eastern Europe. It did not bother German luxury producers to invest in Eastern Europe but I guess Tesla is still working on this image.

antrik

Most of “eastern” Europe is part of the EU. It’s not really like USA vs. Mexico at all…

antrik

Poland and their neighbours aren’t nearly as cheap nowadays as they used to be. Still quite a difference from Germany of course; but it’s declining sharply — so it will be even less of a difference by the time the factory ramps up.

More importantly, labour cost is a minor factor in highly automated mass manufacturing. Things like supply logistics can often outweigh this. Notice how CATL is also building their factory in Germany.

Tesla specifically has even more reason to consider Germany, since an ability for their Grohmann engineers to visit the factory regularly is probably quite valuable…

Windbourne

The grohmann engineers can easily visit factory in france as well.
I will say that in light of the German gov trying hard to screw over Tesla, I am amazed that he would consider Germany.
I have to agree with somebody else when they said that Tesla is just using Germany to get more concessions from another nation.

Blablubb

Not everything is a Trumpian political decision. Governments are changing. I am sure Tesla will choose a location with the best mix of labor, local network, market access.

John

Germans tend to hate Tesla, even up to the highest political level. They don’t like gamechangers nor disruptive technologies. So it would be the perfect place. Low wages too (despite what many believe). Then again: the Dutch highways are full of Teslas and the government/industry/union partnership there just announced new policies to support EVs even more. There is no country more efficiently run than that (apart from Switzerland maybe).

Pushmi-Pullyu

“Low wages too (despite what many believe).”

I’d rather rely on facts than on “what many believe”.

In per-capita wages, German ranks #13 in the world, just ahead of France and the UK, but behind other European countries such as
Switzerland, Norway, and Denmark.

Netherlands comes in at #6; I think it’s safe to say no Gigafactory will ever be built there!

But my guess would be some country with lower wages and much less State protection of collective bargaining; a country such as Spain (#20), Italy (#21), Poland (#27), Greece (#28), or possibly even further east.

The need for year-round access to shipping via warm-water port will likely rule out the Czech Republic, Hungary, and Slovkia. It also makes Poland, Lithuania, and Latvia questionable, since their only ports are in the Baltic.

I’d suggest Ukraine might be on the list if it wasn’t for the ongoing Russian-backed civil unrest-cum-invasion./ invasion.

https://en.wikipedia.org/wiki/List_of_countries_by_average_wage

Some Guy
One has to divide between wages per capita and total cost of labor in relation to factory output, which usually is highly favorable in Germany. Look at VW, they still manage to be profitable somehow despite paying multiple billions for Dieselgate and having an incredibly inefficient management (currently they are renting an airport to dump 200 k vehicles (yes, 0.2 million cars) that they can’t sell now because of tests that they thought they could postpone by lobbyism for another year or so). Government incentives for new industrial sites as well as closeness to the market and an automotive industry infrastructure is another important factor. Manufacturing Tesla vehicles in a highly automated plant in Eastern Europe might be cheaper in labor cost, but the average car buyer in Eastern Europe can’t afford a brand new Tesla, so almost all would have to be exported. In addition, producing vehicles in Germany would make Tesla basically a domestic manufacturer, similar to Ford (Cologne factory) or formerly GM (Opel brand cars). Last but not least, it will be way harder for media, public and competitors to bash Tesla in Germany when they are creating jobs there, while the other manufacturers getting rid of… Read more »
Bogdan

If Tesla were to be home made in Germany, the german buyers would treat it like a german brand

John

https://ftalphaville.ft.com/2017/07/11/2191249/the-myth-of-the-german-jobs-miracle
There is your proof of the high wages in Germany. 16 % is close or near the poverty line. No comparison to Switzerland or Norway (not in the EU) or Denmark (not in the Eurozone), remains the Nethetlands with one of the highest added value per worked hour in the world, part of the Eurozone, biggest shipping port by far.

antrik

Germans hate Tesla not because it’s a game changer / disruptive, but rather because it’s a foreign maker challenging their sacred domestic car brands — and an American one to boot, which is the worst evil of all!

Bogdan

They don’t hate Tesla because it’s beeing disruptive, but because they could lose their jobs, that’s all.

Jopp

They dont like disruptive technologies? So please tell me, who pushed solar and wind energy to what it is nowadays? Without the germans solar would be many times more expensive than it is today.

John

That’s exactly why their main source of energy is still subsidized lignite! Because they love new technologies. They managed to convince their politicians that diesel is the best fuel and has a great future ahead!

Windbourne

uh, hate to point this out, but most of wind/solar R&D was done by America, while most of the low cost manufacturing was done by China.
Germany’s solar really was not much on R&D or on lowering manufacturing costs.

Peter

No most wind R&D was, and still is done in Denmark.

Peter

Denmark pushed wind energy to what it is nowadays.

Blablubb

What’s Panasonic‘s part in this story? It always sounds like Tesla is taking these decisions in isolation? The actual cell producer is Panasonic

Pushmi-Pullyu

Panasonic is an apparently somewhat reluctant partner to Tesla in Gigafactory 1. Tesla is obviously calling the shots and setting the level of production. Panasonic has shown great reluctance in committing its share to the cost of the ongoing construction there, and is providing the money only in stages. (But to be fair, Tesla is building out Gf1 only in stages, so perhaps Panasonic’s funding in stages is entirely appropriate.)

What’s strange is that if you look at the actual written contract between Tesla and Panasonic (or at least the parts the public can see), it describes Panasonic as more of a vendor that just rents space inside Gf1. But it’s pretty clear their partnership is far closer than that. Tesla and Panasonic work closely together at the factory, with Tesla doing the contracting for delivery of the raw materials that Panasonic needs to make the cells.

Someone described this as an “arm’s length partnership”. Maybe there’s some truth to that; perhaps very close economic/ manufacturing ties, but perhaps Tesla is holding Panasonic at “arm’s length” regarding the legal obligations, ties, and contracts?

antrik

I’m not aware of Panasonic showing any undue reluctance? Obviously, they are only building as much capacity as Tesla actually needs at any particular time.

Windbourne

Tesla buys Panasonic battery cells for S/X that are produced in Japan, to Panasonic’s specs.
Panasonic WANTED all of this to remain in Japan, not America.
However, Elon insisted that future stuff be done in America.
Panasonic provides the machines for making battery and solar cells.
Tesla is providing the tech/specs of everything.

In addition, I believe that it is Pansonic that purchases raw material, though some interesting issues cropped up. Tesla did the lithium, while Panasonic did the rest including Cobalt.

antrik

Tesla doesn’t have to partner with Panasonic. They explicitly said a while back that they are keeping open the possibility of working with other suppliers. (Though that poses the question whether other cell makers could actually produce cells to the same specifications?…)

Either way, since Panasonic is essentially just renting the space at Tesla’s facility to produce cells for use at that same facility, I don’t really see much reason why Panasonic would have much say regarding the location… Though they probably do provide some input relevant to pricing I’d guess.

km

why spend billions on a new factory when there are so many empty in Europe which could be bought for 1 euro. Subsidies for a new factory will never go over 250 mln because EU will not allow it.

antrik

If they can find one in a convenient location and providing all the necessary amenities, I guess they might… Not sure that’s realistic, though.

orinoco

Rhineland-Palatinate politicians are known to waste tax payers money on big, useless projects. And so far Rhineland-Palatinate has no headquater of a german car manufacturer. Bavaria has BMW, Baden-Würtemberg has Daimler, Lowersaxony has Volkswagen, Hessen has Opel. So maybe Rhineland-Palatinate may be predestined to become German “Tesla”-Country. I’m not sure whether we can be glad of that …

viriato

Spain is cheaper than Germany or Nederlands, has better infraestrucutres by far (ports, railway, thousands of km of highways) than eastern European countries, a huge car industrie, experienced, with lot of suppliers, a lovely sunny weather, more than 70% of power supply with no CO2 emissions… and Tesla will be very well received, due de unemployment problems. I think is the best place for Tesla.