Brexit: Elon Musk's move to pick Germany over Britain triggers widespread reaction

Elon Musk's statement comes as Nissan has already said that a disorderly departure from the bloc would be unsustainable and put its entire business model in jeopardy.

 

HIGHLIGHTS

• Elon Musk recently announced that Tesla will build its first European factory as well as an engineering and design center in Berlin.
• Musk also said that Brexit made it "too risky" to set up a gigafactory in the UK which triggered a widespread reaction from the anti-Brexit community.
• The electric-car maker is also gearing up to open its factory in Shanghai, China.

 

Tesla Inc Chief Executive Officer Elon Musk recently announced that the electric-car maker will build its first European factory as well as an engineering and design center in Berlin. By building a plant in Germany, Tesla will be able to add the "Made in Germany" accolade. Berlin also has earmarked financial support for manufacturing electric car battery cells. Musk, in a tweet, said that Tesla will build batteries, powertrains, and vehicles, starting with Model Y lower-priced sports utility vehicle at the Berlin factory.

Speaking to Auto Express after making the announcement, Musk said, “Brexit made it too risky to put a gigafactory in the UK,” triggering a widespread reaction from the anti-Brexit community in Britain. 

Britain's vote to leave the European Union has hurt foreign investment because the country's future trading relationship with the EU is still not clear, more than three years after the referendum. Britain holds a parliamentary election in December in a bid to break the impasse.

Major carmakers such as Nissan have said a disorderly departure from the bloc, where companies face tariffs after leaving the EU without a transition deal, would be unsustainable and put its entire business model in jeopardy.

Last month, Tesla said it expected its European factory to start production in 2021. The carmaker is also gearing up to open its factory in Shanghai.

Musk made the announcement about the Berlin plant at the Golden Steering Wheel awards ceremony in Germany. He said the factory will be near the new Berlin airport. Musk had said in June last year that Germany is the frontrunner for its first factory in Europe.

"Tesla is coming to Brandenburg with a big investment," Dietmar Woidke, state premier of Brandenburg, which surrounds Berlin, said in a statement. "We lobbied for this for a long time in intensive talks and with good arguments." The company is yet to prove it can be consistently profitable. Tesla has said it expects to be cash-flow positive but faces big investments with the launch of new factories and the development of products including a pickup truck and a semi-truck.

Musk's appearance at the awards ceremony is another example of Tesla's efforts to co-opt marketing tactics employed by German manufacturers, which have a reputation for quality. Tesla, for instance, has tested its cars on the Nordschleife, the notorious northern loop of the Nuerburgring racing track, as a way to burnish the brand's reputation for reliability and sporting prowess.

The company has an engineering firm in Pruem, Germany, that specializes in automated manufacturing systems for battery making plants. In October, Reuters reported that Tesla is aiming to start production for its factory in China amid uncertainties around orders, labor, and suppliers.

(With inputs from agencies.)