Tesla has taken the fight to the home turf of German global automobile powerhouses by setting up a Gigafactory there.
Will the traditional automakers can stop Tesla from crushing them? BMW, Volkswagen, Mercedes-Benz, And Audi have been among the top german brands making cars and other automobiles for decades and have their products on every continent. Their vehicles are known for high quality and efficiency; however, the German brands want to share their internal combustion engine legacy and become full electric vehicle makers.
Volkswagen, in particular, has been doing a lot in the electric mobility space to redeem itself after the diesel gate scandal that saw it paying out billions of dollars in fines for fudging carbon emission figures for many years. One company they all have to reckon with is Tesla, which has managed to become the global leader where electric vehicles are concerned in a matter of years.
Even though the german brands had ahead started, Tesla has overtaken them all and currently boasts the best selling electric car of all time within seven years, Tesla’s market cap has grown to be more than three times bigger than that of Volkswagen Daimler, and BMW combined the three biggest German automakers.
This is despite the fact Tesla has produced far fewer cars to make matters worse, Tesla has taken the fight to the German automakers by setting up its first gigafactory in Europe in Berlin
right off the famed autobahn, it is the same town where BMW had got approval to build a plant but never did when Giga berlin is completed groonheider a city of 9,000 people will grow to accommodate 40,000 workers there will be new four-lane roads a bike tunnel and a brand new train station the plant will produce batteries powertrain and vehicles,
including the model Y crossover the model 3, and any In other future models, the tesla effect is being felt already as the city reports it is being bombarded by development proposals from 22-story apartment towers to shopping malls in anticipation of the influx of well-paid workers, there is also what has become known as Tesla tourism as fans arrive on weekends from all over the country with cameras to document the construction of Giga berlin despite the weather
All this buzz could not have escaped the notice of the German automakers who have not been able to command such attention that special move to build a factory in berlin is proof that Tesla is serious about dominating the EV industry even in their home country, as described by an analyst, Elon musk is going where his strongest competitors are right into the heart of the global auto industry.
No other company has dared in recent decades german automakers have reasons to be worried as Tesla has already been announced as one of the 11 companies that will share in billions of dollars worth of government subsidies money that should have all gone to them even before stepping into the country, Tesla has been crushing the german auto industry take, for example, the practice of buying green car credits, which sees Volkswagen probably partly funding Tesla’s Giga berlin.
Volkswagen reportedly had to do so to be able to make vehicles in China, which runs a credit system that encourages automakers to work towards a cleaner future by improving fuel efficiency or straight off driving electric cars the green credits can be offset against negative credits accrued by companies that have to make polluting vehicles if there is a shortfall a company can approach another company with a surplus, and this was the case with the joint venture Volkswagen formed with state-owned Chinese automaker FAW by turning to Tesla, which naturally has a rest as a maker of purely electric vehicles Volkswagen is in the unenviable position of funding a rival company that is coming to its country to eat its lunch.
For reference, Tesla made more than 1.5 billion dollars for selling regulatory credits in 2020 alone Volkswagen recognizes the seriousness of meeting such emission targets. It would instead give its money to its competitor than risk a fine as it was recently forced to pay 121 million dollars by the European Union for missing its carbon emissions the target for its fleet by just 0.5 grams per kilometer now the choice of Berlin as a location may look suicidal for Tesla for several reasons for one labor.
It isn’t cheap in Germany, especially in the auto industry, estimated to be more than 50 percent higher than us. In comparison, it is just an hour’s drive away from grunderheider in Poland; labor is five times less expensive and demands electric cars flat in Germany. The buyers are more likely to buy local brands out of loyalty and high taxes. There is local opposition by environmental activists and bureaucratic delays in getting permits.
Tesla also has to contend with a powerful german workers union, something which musk has fiercely resisted in the u.s. Still, the Dietze’s age metal had won the right to a 28-hour workweek and even got a four pay rise after a series of strikes that cost the auto industry millions of dollars; however, Tesla has several advantages that will help it crush its german competition. First, building electric vehicles require less labor. Tesla is even simplifying further by using its Giga presses which eliminate lots of labor cost Tesla also has the blessings of the country leaders right from the chancellor to the governors and ministers of the state where it is located.
This self-power proximity could, on occasion, prove useful. The economy ministers even personally offered to help ease regulatory hurdles as Tesla tries to secure approval for its gigafactory branding is another critical asset to Tesla that can help its steamroller the german opposition everybody associates Tesla with excellent electric vehicles. At the same time, the rest are seen as wannabe electric brands. The biggest advantage Tesla has is that it is not a behemoth trying to move away from decades worth of internal.
Combustion engine legacy BMW for example, will spend a lot of time and resources reorganizing its operation to become fully electric billions will go into setting up new production facilities or retooling old ones setting up new supply chains like sorting batteries while maintaining the old ones it also has to balance the interest of its fan base, which could be a tricky endeavor as an electric vehicle company out of the gate, Tesla has no such baggage weighing it down this is not to say the German brands are not fighting back Volkswagen e up which is the electric version of the city car Volkswagen up, for example, claimed the top spot from Tesla’s Model 3 earlier this year in total sales.
Volkswagen as a brand also outsold Tesla boosted by its id3 to claim a 25 share of all-electric car sales in the country compared to 9.4 percent for Tesla. Still, the up is far less expensive than the model 3 with far fewer capabilities which means the two models didn’t directly. Tesla relied only on model 3 in Germany, which had to be imported, meaning sales were limited.
This is expected to change when Giga berlin comes online and starts to make model 3 model Y and other future models locally, just as is happening in China, Mercedes has also announced its electric EQS, a genuinely stunning luxury design that will surely turn heads it features top specs like its huge hyper screen dashboard. The driving range that will make model 3 owners jealous Volkswagen-owned Porsche has also released Taycan
can be available in saloon and estate versions, a great effort from a legacy internal combustion engine brand.
However, Tesla is well-positioned to fend off their attack. Both German models are not mass-market, and Tesla even has its well-appointed luxury models at similar price points. It has to make them locally or ship more of them into the country. The German auto industry is not exactly helpless before Tesla. Still, there is no doubt they will take a beating, especially with the GigaBerlin lin that will soon be commissioned.
