Tesla's Gigafactory On Hold

Commercial Production Delayed By Tesla's Late Battery Plant Permit Application

Tesla revealed plans for its first Gigafactory in Europe near Berlin in late 2019, challenging Germany's conventional car industry titans Volkswagen and Daimler. The factory's opening date, which was originally slated for last summer, has been pushed back multiple times, and no formal launch date has been set yet.

• Despite the pandemic's setbacks, Tesla pressed forward with the construction but has faced local obstacles and red tape since the first brick was laid
• Plans to expand the facility's permit to include battery cell production have recently drawn considerable concern

Expect A Slow Start

Orders from customers are flooding in and the plant is already fully operational. However, it will take time to ramp up to full production after German authorities give their final approval for the plant.

Elon Musk, visiting the plant in October 2021, stated that “It will take a longer time to reach high-volume production than it took to build the factory. It’s really difficult”.

Build Lead On The Back Of Surging European EV Sales

In 2021, Tesla reported global sales of 936,172 vehicles, up 87% from the previous year. Analysts believe the company might sell up to 1.5 million cars world-wide this year. With its German Gigafactory, Tesla will be able to supply European auto markets without having to rely on pricey imports from its Chinese and American operations.

According to Pedro Pacheco, an automobile expert at Gartner, the German plant could significantly reduce waiting times for new orders "there will be less lead time for customers in Europe because they don’t need to wait for vehicles that come all the way from China".

Supply Chain Constraints And A Hunt For Talent Ahead

Microprocessor shortages have harmed the automobile sector as a whole and key components in rechargeable batteries have surged in prices, fuelled by high demand for electric vehicles and a scarcity of supply.

• According to data from the Benchmark Mineral Intelligence (BMI), lithium prices have increased by nearly 500% year on year
• Meanwhile, the competition for automotive and tech skills for the factory will be fierce, as rivals like Volkswagen press ahead with their own EV manufacturing plants in Germany

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Charlie Deets on Unsplash.