The entry of major auto makers and new startups has greatly ratcheted up the competition in the global electric vehicle (EV) market. Tesla Inc., which has been the flamboyant pioneer in this field, is now compelled to accelerate its overseas expansion plans in order to maintain its prominence. After confirming the rumor that the company’s first overseas factory will be established in China, Tesla is reportedly to be exploring opportunities to build similar facilities in Europe. According to the Wall Street Journal, Tesla has already conducted preliminary discussions with authorities in Germany and the Netherlands about finding a spot for a manufacturing plant. The Wall Street Journal is also supported by reports from other news organizations saying that Germany and the Netherlands are in a competition to host Europe’s first Gigafactory – a production base for batteries used in Tesla EVs.
Currently, Tesla’s EV operations are mainly located in the US. The Tesla Factory in California’s city of Fremont assembles the vehicles, while the Tesla Gigafactory 1 in Nevada’s city of Reno manufactures the lithium-ion batteries for the vehicles. Tesla has long recognized that it must quickly establish overseas bases to maintain its growth momentum. Since China and Europe are the world’s two largest EV markets in terms of sales, Tesla wants to have direct access to these regions as well as leveraging their local manufacturing capabilities to raise the company’s overall vehicle production.
This July, Tesla announced that its first overseas factory will be built in China. Once completed and in operation, the Chinese plant is expected to produce as many as 500,000 vehicles annually as to meet the local demand. Earlier this June, Tesla CEO Elon Musk had also stated on Twitter that he will announce the location of the company’s new European facility by the end of the year. Via Twitter, Musk also mentioned several countries that are suitable candidates. While Musk said that Germany is the frontrunner, he further noted that having a plant near either Belgium or Luxembourg would allow the company to be near several key local markets within Europe.
After Musk had made those tweets, representatives from the German states Rhineland-Palatinate and Saarland sent their respective bid offerings for the plant site to Tesla and since then have maintained contact with the company. German officials told the Wall Street Journal that Tesla can establish a highly competitive manufacturing base in either one of these states because they are bordering next to France and strategically situated to tap into demands from various parts of Europe. The Wall Street Journal reported that the German authorities have yet to hold formal talks with Tesla on this subject, but they are doing everything they can to keep their respective locales in the competition.
Dutch officials have also been persuading Tesla to establish a Gigafactory in the Netherlands. According to sources in the Dutch government, the negotiation with the company is at the initial stage, and it is uncertain that a deal will be made. However, the Netherlands is already accommodating Tesla’s European headquarter and a facility that modifies Tesla EVs as per requirements of local standards. Hence, the Netherlands is well prepared to host a Gigafactory.
Due to technological advances and rising demand, the established players in the automotive industry such as GM Co., Ford Motor Co., VW Group, BMW AG, and Japanese car makers are now actively establishing their presence in the global EV market. Tesla therefore has to be aggressive in order to maintain its edge over these competitors. The company is currently preparing the launch of Model Y, just as it is under pressure to raise the production of Model 3. If Model 3 and Y, which are designated as vehicles for the economical market segment, can be delivered to consumers on schedule, then Tesla will be able to transition from being a luxury EV brand to a more popular and competitive company that is leading the global EV market.
(This article is an English translation of news content provided by EnergyTrend’s media partner TechNews. The credit of the photo at the top of the article goes to Tesla Inc.)