Published on June 23rd, 2018 | by Kurt Lowder0
Elon Musk Tweets European Gigafactory To Likely Be In Germany
June 23rd, 2018 by Kurt Lowder
In classic Elon Musk style, he made a major hint about a coming gigafactory on twitter this week. Musk tweeted, “Germany is a leading choice for Europe. Perhaps on the German-French border makes sense, near the Benelux countries.”
Musk’s preference to build the European gigafactory in Germany makes perfect sense on many different levels. First and foremost, it is the home of the engineering firm Grohmann Engineering that Tesla recently purchased. When Tesla purchased Grohmann, many of its employees were upset that they would no longer be servicing their previous customers. They had immense pride in servicing top German companies.
Tesla is aiming to be the best manufacturer in the world, so it went out and bought top-level engineering talent. Keeping that talent motivated is crucial to Tesla’s goal. As matter of logistics, it makes sense that engineers should be within a close proximity of the gigafactory. Over the years, Tesla has continually boasted that its engineers spend ample time on the factory floor and collaborate with production employees. Tesla is all about cutting out inefficiencies and shortening routes of communication. The young Silicon Valley giant has been critical of other companies who have engineering and production separated by vast distances.
Tesla is aiming for ever higher levels of automation. Therefore, keeping the engineers satisfied and maximizing their productivity should take priority over other factors like labor costs, real estates costs, etc. The company is dedicated to continually improving its manufacturing processes, which would require regular visits from engineers.
Aside from the Grohmann, Germany is home to some of the best engineers in the world. It is part of their culture and particularly part of their education system. They start tracking students early on. Those with skills in STEM are identified and grouped together. It is not like the USA where they try to force everyone into algebra in 7th grade regardless of their ability. While this tracking may seem politically incorrect, it ensures the students can stay within the zone of proximal development.
A German high school in STEM will have an additional year of study in high school, and when they graduate high school, they will roughly have the educational experience equivalent of an American student with an AA degree. Of course, in Germany, higher education is free. This brilliant educational system ensures the brightest students are not left behind for economic reasons.
Germany is the most populous country in Europe and is an economic powerhouse. Tesla has had difficulty in the German market, because Germans are fiercely loyal to domestic car brands. The fastest way to enter that market is make it known that Tesla is relying on German minds to reach their goal. Employing Germans will go a long way to improving Tesla’s sales in Germany.
In his tweets, Musk stated that the factory would likely be along the French border, which of course would be a central location that would help to cut down on delivery times throughout the continent.
All gigafactories will use 100% renewable energy and there certainly is no shortage of it in Germany. While a few small European countries have a higher percentage of renewable energy in their mix, Germany has more than any other in aggregate.
What other reasons indicate that Tesla should build the European gigafactory in Germany? I also have a curious suspicion that Musk tweeted on the topic after Tesla shares took a tumble on news of a Tesla factory fire and employee sabotage. Tesla shares had been rising steadily for the last week until this negative news. It certainly would be a quick way to flip the script back towards Tesla’s planned rapid growth. Thoughts?