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Published on November 17th, 2019 | by Alex Voigt

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A Gigafactory For Berlin

November 17th, 2019 by  


Tesla Berlin store

Tesla Berlin store getting ready to open in 2014. Photo by Zach Shahan, CleanTechnica

When people ask me how it is possible that most of my predictions about Tesla are correct, my answer is, “Those are not my predictions. You just have to listen carefully to Elon Musk, and do it twice, better trice.” Elon tells the truth, unless he is joking, and he likes joking but not if it’s about his mission to change the world to sustainable transportation.

In that regard, Elon did say many times that he preferred the location for the Gigafactory in Europe to be in Germany. We now know it’s in Brandenburg, which is the state or county (bundesland) that surrounds Berlin.

Berlin and Brandenburg are two separate German counties that you can compare to a certain extent with states in the USA. Each of them has duties, obligations, and rights, and one of those rights is to make decisions about industries that apply for a site.

In other words, although most will talk in the future about Berlin as the location for Gigafactory 4 (GF4), don’t be surprised when Germans call it Brandenburg. As a matter of fact, though, it’s still a part of the town Berlin where the Berlin Wall once stood (of which President Trump last week declined to take a piece as a present, for obvious reasons).

To understand Berlin, you have to understand a bit of our history (yes, I am a proud German). We’re home to what was the capital of Prussia back in the 18th century, famous for outstanding reforms, innovation, culture, science, and wars. Actually, a relative of mine was the Master of Mint for the famous King “der alte Fritz” Friedrich I, but that’s a story that should be told at a different time.

Due to smart politicians and wars in the 18th century, Berlin did very well and grew in population as well as influence to become one of the most important towns in Europe. WWI caused the German Kaiser to step down, which was a dramatic shift for Germany, and WWII was an even more dramatic time for Berlin, being cut into two pieces by the war and wall and isolated from Western Germany as well as the country surrounding it, Brandenburg. With that, Berlin lost all industries supplying it. Without support from the US, and Kennedy’s famous sentence “Ich bin ein Berliner” (“I am a Berliner”), which built until today a strong bond between Berlin and the US, Stalin would very likely have achieved in getting Western Berlin also and changed history significantly as a result.

The enclave behind the Iron Curtain called Berlin has been for a generation a peculiar artificial place, kept alive with money and support from rich Western Germany. Most don’t know that as a German male you could escape mandatory military service in Western Germany by moving to West Berlin, and after a few years of hanging out, your duty was lifted. In that time, many more men than women lived in that town, which had no real industry left and was no longer a capital since that title moved to Bonn for political and military reasons.

In 1989, a new change happened when the wall came down and an artificially kept alive town with DNA you won’t find anywhere else opened its doors to the world and regained its title as capital. It has attracted all types of creative people since it’s been a tremendously inspiring place, like a time capsule that moved artists like David Bowie and many others to work and live in a different world. This explosion of inspiration led to a town that’s rightfully called creative, supported by low housing, apartment, and living costs simply due to the fact that well paid industry jobs did not really exist there. Berlin has been a cheap place to live for decades, only kept running by incentives from counties like Bavaria (and others).

A former mayor once called it “poor but sexy.” It remained like that for another generation, and besides being seen as the most famous city in Germany, for Germans, it’s been rather a poor town with an eastern atmosphere. Creative people with less money moved there, and a startup scene developed in retail and software, particularly known for some success stories, like Zalando, a now large fashion retailer.

All of that history is important to know in order to understand why the selected location of the GF4 is a perfect fit for Tesla, a fit that can be explained in just a few categories.

Labor: comparably cheap & available

Berlin has a well educated, young, eager, and motivated population that loves the US for historical reasons (not really the current administration, I am afraid). And with the low cost of living, wages are higher than in other European countries, but lower compared to all other towns of importance in Germany, like Hamburg, Munich, Düsseldorf, Stuttgart, and others. With a rather high unemployment rate, it will also be easier for Tesla to hire well-educated people in Berlin and Brandenburg who are willing to go the extra mile to make a mission happen.

Land: lower costs & incentives

Brandenburg is a large, flat county with a lot of free space that it will happily give to innovative companies like Tesla. It’s rumored that subsidies and incentives will be paid by Brandenburg and/or Berlin, and that’s no surprise. Right now about €100 million is the number that has been shared, which is pretty usual business between an industry partner and government that you can summarize in the sentence “money for jobs.” It’s nothing unusual, and considering the boost for Berlin in terms of attraction and reputation, it’s good business.

Logistics: new infrastructure & the center of Europe

If you take a map and look where Berlin is located, you will realize it’s perfectly placed (with the shortest distance) between eastern and western countries. Air, land, and road transport are perfectly supported with the new (while not yet finished) Berlin airport, an Autobahn nearby, as well as train tracks and waterways with harbors. Logistically, it can be seen as the best location you can imagine.

Supplier: strong supplier base nearby

After the wall went done in 1989, automotive companies like Porsche and VW started to build factories south of Berlin (e.g., in Leipzig, Saxony), which attracted a lot of suppliers and an industry ecosystem. Tesla will benefit from world-famous German engineering and the “Made in Germany” reputation.

Energy: securing renewable energy for production

In the 5 to 6 month negotiation the team from Tesla had with Brandenburg’s politicians (they have been the ones to approve of the partnership, not Berlin), one of the key elements in favor of the location has been securing efficient renewable energy for production. That alone tells you a lot, that this company wants to build a better future. Other locations have been ruled out because they could not guarantee that demand.

Politics: close to the center of government

It’s a clear benefit to be very close to Berlin’s government, where important decisions about the auto industry are influenced and taken. Tesla, as the only car company in town, has a genuine pole position to impress politicians with its vehicles, technology, innovation, and atmosphere. Most German politicians have not been in a Tesla vehicle yet, which changes mindsets in milliseconds. Furthermore, we know that having a plant tour in a Gigafactory has a fundamental impact on you as a person and your thoughts as a human about electromobility and Tesla’s culture. These tours and test drives will be instrumental for decisions taken in the German parliament.

Culture: Berlin will truly welcome Tesla

Berlin would not exist as the town it is today without the support, friendship, and strong influence of the US, without President Kennedy organizing supply for Western Berlin and undermining the blockade from the Soviet Union trying to capture Berlin. It also benefited from George H.W. Bush, with his friendship with German Chancellor Helmut Kohl a key element of trust required to reunite Germany as a nation.

History: reputation for building great cars

German engineers are called the best in the world, and with Tesla Grohmann Automation (formerly Grohmann Engineering), a company acquired as a specialist for automotive automation that has reportedly done a fabulous job with Tesla battery pack production, Elon learned quickly that German engineers can make a key difference for the future of his mission. His short presence on television last week, which I watched in my Model 3 while Supercharging, already had an extremely positive impact on his reputation here since he called out German engineering as the best.

Narrative: shifting to trust, belief, and certainty

In the USA as well as in many other countries of the world, Tesla fear, uncertainty, and doubt (FUD) spread by the media as well as so-called experts and analysts can be called one of the largest misinformation campaigns in the world, and it has had and continues to have a hugely negative impact on what Germans think and know about Tesla and its cars. The second-largest advertising industry in Germany is the auto industry, and Tesla has so far not paid a dime. To be located in Germany means 7,000 to 10,000 people will get jobs. Those 7,000–10,000 families make on average 34,000 people talking positively about their employer, which pays for their livelihood every month. This network will have a very positive impact on the Tesla narrative and correct false misleading information.

To conclude, as a German engineer, I am extremely pleased to see Tesla building its Gigafactory in a place that gives the company the best of all worlds, occupying Europe right from its automotive heart. 
 
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About the Author

Alex Voigt has been a supporter of the mission to transform the world to sustainable carbon free energy for 40 years. As an engineer, he is fascinated with the ability of humankind to develop a better future via the use of technology. With 30 years of experience in the stock market, he is invested in Tesla [TSLA], as well as some other tech companies, for the long term.



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