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Elon Musk to build first European Gigafactory near Berlin

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
Tesla CEO Elon Musk arrives for the automobile awards "Das Goldene Lenkrad" (The golden steering wheel) given by a German newspaper in Berlin, Germany, November 12, 2019. Credit: Reuters/Hannibal Hanschke

Elon Musk has said Brexit made it “too risky” to build Tesla’s first European plant in the United Kingdom, and opted for Germany instead.

The billionaire surprised the audience at a car awards ceremony on Tuesday by announcing he would build Tesla’s first European plant near Berlin.

The Tesla boss was at the award ceremony hosted by Bild newspaper accepting a Golden Steering Wheel award for the Model 3.

"I actually have an announcement, which I hope will be well received,” said Musk. "We decided to put the first Tesla Gigafactory Europe in the Berlin area."

In an interview with Auto Bild’s sister publication Auto Express after the announcement, Musk also said that “Brexit [uncertainty] made it too risky to put a Gigafactory in the UK.”

The news was a surprise as the states of Lower Saxony and North Rhine-Westphalia were long considered to be frontrunner locations for the factory in Germany.

According to Musk, the factory is to be built near the new BER airport, which has been sitting empty for years, unable to open due to endless problems— the e-car pioneer said he hoped the factory would be faster to be ready than the airport. He also said that Tesla would set up an engineering and design centre in Berlin. He tweeted that the Berlin site would produce “batteries, powertrains & vehicles, starting with Model Y.” The Model 3 is also expected to be built here.

Aerial photo taken on shows the tesla gigafactory at night in Shanghai, China. Image: Getty Images.

Asked on stage why he thought Germany is so far behind in e-mobility, Musk replied: “I don’t think German is that far behind, I think it’s always difficult when there’s a lot of momentum around an old technology, there’s a lot of infrastructure, and a lot of capital that’s tied up in an old technology.”

READ MORE: German drivers to get up to €6,000 discount on electric cars

“When you have a technology that’s unproven you say ‘does it really make sense to place a bet on this technology?’” Musk said onstage with Volkswagen CEO Herbert Diess. “When we started out at Tesla everyone thought we were huge fools—and I thought we were fools too, frankly—but I thought it was important to get to a sustainable energy future.”

“Even if you discount the environmental situation, eventually we will run out of oil.. you can’t recycle oil,” Musk said, adding that his original interest in electric cars went back to “almost high school.”

Having a production base in the European Union will make it easier for Musk to serve the huge EU market, and avoid any future tariff issues between the US and Europe. He acquired Grohmann, a German engineering company in Rhineland-Palatinate, in 2017.

READ MORE:  Tesla's real battle in Europe begins in 2020

A huge Tesla plant in the country’s capital region is going to up the pressure on Germany’s carmakers, who have been sluggish to really get started with electronic-vehicle production. Volkswagen kicked off mass production of its new ID.3 electric car at its plant in Zwickau, Germany, a few weeks ago, and is pinning its hopes on this little car becoming the same kind of success story in the reasonably-priced category that the VW Beetle and Golf were in the past.

Musk’s first battery-producing mega-factory in Reno, Nevada is operational now, and he is constructing another one in Shanghai, China. Tesla surprised investors by posting a profit of $143m (€128m) in the third quarter despite a fall in revenue.