It’s Tesla’s first entry to European production, having selected a site that will churn out as many as 500,000 cars a year, employ 12,000 people and pose a serious challenge to Volkswagen, Daimler, and BMW, reports Industry Week (Jan. 20, 2020). The frantic activity underway to quickly set up Tesla’s latest assembly plant is a daring attack on the German auto establishment.
The project represents a second chance for the quiet town of Gruenheide, just southeast of Berlin. Gruenheide lost out on a similar factory two decades ago, when BMW opted for Leipzig. That missed opportunity helped town officials to move quickly when Tesla expressed interest in entering Europe, with a plot set aside for industrial use and offering easy access to the Autobahn and rail lines. “The investment is a unique opportunity,” said the mayor. “It gives young people with a good education or a university degree the possibility to stay in our region.”
The plant will make batteries, powertrains and vehicles, including the Model Y crossover, the Model 3 sedan and any future cars. The factory will include a pressing plant, paint shop and seat manufacturing in a building that will be 2,440 feet long—nearly triple the length of the Titanic. There’s space for four such facilities.
Tesla is taking its fight for the future of transport into the heartland of the combustion engine, where the established players long laughed off Tesla as a feeble upstart that couldn’t compete with their rich engineering heritage. “No other foreign carmaker has done that in decades given Germany’s high wages, powerful unions and high taxes.” said an industry analyst. Building a factory in Europe’s largest car market is a major test of Tesla’s global ambitions, a place where buyers are loyal to local brands. Meanwhile, labor costs in Germany’s auto sector are 50% higher than in the U.S. and five times what they are in Poland, just an hour’s drive away from Gruenheide.
For Gruenheide, the planned investment has suddenly transformed the town of 8,700 people into a sought-after location.
Classroom discussion questions:
- Why did Tesla select this European site?
- What is your SWOT analysis of this location decision? (See Chapter 2 in your Heizer/Render/Munson text)