By William Boston and Tim Higgins
Elon Musk pulled off opening a brand-new car factory in China
with breakneck speed, sending Tesla Inc.'s shares to record
heights. A follow-up act in Germany faces potential speed
traps.
Tesla, which in November outlined its German factory plan, in
recent weeks filled in some details for building on a site outside
Berlin. The new facility in the state of Brandenburg is slated to
go up quickly, if not quite within a year's time as achieved in
China. Mr. Musk, though, is known for aggressive self-imposed
deadlines that are often missed.
Among the challenges for his German plan are two peculiar ones:
colonies of bats and unexploded World War II bombs that would need
to be removed from the factory site before construction can
begin.
The two overseas factories are key to making Tesla a global car
maker. Together with the company's main plant in Fremont, Calif.,
Tesla's production capacity could be on course to exceed a million
vehicles a year. Tesla built about 50,000 cars in 2015, with its
output rising to above 360,000 vehicles in 2019.
When Tesla can reach the million mark is uncertain. It plans an
initial output of 150,000 cars in Germany, growing to 500,000 at a
later, unspecified point, matching its China ambitions.
Tesla didn't respond to a request for comment.
The company wants to begin its German production, including its
mass-market Model 3 car and the coming Model Y sport-utility
vehicle, in July 2021, according to filings with the state
government.
Tesla has indicated in filed documents that the facility outside
Berlin would employ fewer than 4,000 people, though employment
could grow to more than 8,000 as production increases.
An auto factory was last built in Germany by Porsche AG for its
first all-electric sedan. After the unit of Volkswagen AG broke
ground for the body shop in 2015, it took 48 months before
production began.
Porsche had to meet strict environmental and architectural
guidelines. The assembly facility near Stuttgart had to be largely
underground to restrict its height to 38 meters (about 125 feet) so
as not to block the flow of fresh air into the city.
Building a car plant in less than a year and a half is pretty
much unheard of in the auto industry -- but Tesla just pulled it
off in Shanghai. It took years to get China's permission to become
the first foreign auto maker to set up a local manufacturing
facility without a Chinese partner; once it was granted, however,
state-backed entities threw their weight behind construction of
Tesla's so-called Gigafactory.
It took less than a year from groundbreaking to the first
vehicle rolling out of the factory in late December. The success in
Shanghai helped fuel a rally in Tesla's shares. On Friday, the
stock closed at $510.50, which compares with last year's low of
$178.97 set in June.
Tesla is poised to overtake Volkswagen as the world's
second-largest auto maker by market value, though it sells far
fewer cars than the German company. No. 1 is Toyota Motor Corp.
Replicating its recent success will be a challenge for Tesla in
Germany given labor, regulatory and environmental concerns.
"Opening Gigafactory Shanghai in under a year is incredible," said
David Whiston, an analyst for Morningstar Research Services. "I
doubt Germany will move as fast as China permit-wise."
Local officials are trying to prove skeptics wrong. Brandenburg
Economics Minister Jörg Steinbach invoked a rarely used law that
allows the state government to expedite regulatory checks. Tesla
was able to submit its formal application by the end of December
and the environmental impact study just weeks later.
"Tesla operates on China speed," Mr. Steinbach said. "The Tesla
team here is determined to beat the team that set up the site in
China, even if only by a couple of weeks."
When Mr. Musk announced his plans for Germany last year, the
Brandenburg state government responded by creating a task force to
fast-track the approval processes. Tesla also should gain some time
because the state established highway and rail access a decade ago
when BMW AG was considering building a factory on the same site.
BMW opted instead to build in Leipzig.
Still, Tesla faces challenges, including the bats. Colonies of
the protected winged mammals live in the 382-acre patch of pine
forest that has been designated for the Tesla factory. They would
need to be relocated soon so that Tesla can clear the woods by
March, when the felling of trees must be suspended under German
environmental law to protect birds and other animals returning to
nest in the spring.
"The [bats] are hibernating until the end of February and March.
After that mating season begins," said Christiane Schröder, head of
NABU, a German environmental lobby.
If Tesla misses the deadline, it could be months before the
forest can be cleared for construction, jeopardizing the plant's
production schedule. Tesla could apply to be exempted from the
regulation in a bet that political backing for the project would
hold sway.
In an environmental impact study made public in Germany on Jan.
7, Tesla promised to relocate the bats and plant three new trees
elsewhere for every tree it removes. Mr. Steinbach said Tesla has
been working with environmental groups to address their
concerns.
Small groups of demonstrators -- some opposing Tesla's plan,
others supportive -- gathered near the site on Saturday to voice
their views. A more formal community meeting about the development
is slated for March.
Tesla, though, may encounter another obstacle that is surely new
for the company but not atypical for Germany: unexploded
ordnance.
"It appears that there are World War II munitions on the
property, specifically bombs dropped by American aircraft,"
Brandenburg Environment Minister Axel Vogel, a member of the Green
Party, said. "We will remove any unexploded bombs wherever they are
found."
Germany will foot the bill for the explosives removal, but the
process could cause delays for construction.
--Yin Yijun contributed to this article.
Write to William Boston at william.boston@wsj.com and Tim
Higgins at Tim.Higgins@WSJ.com
(END) Dow Jones Newswires
January 21, 2020 05:44 ET (10:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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