Tesla's long-delayed German Gigafactory has been given conditional approval

On March 4, 2022, a broad view of the Tesla electric car manufacturing construction site at Gruenheide, near Berlin, Germany. Annegret Hilse/REUTERS

Tesla's long-delayed German Gigafactory has been given conditional approval.

The state of Brandenburg said Tesla won conditional approval for its German gigafactory outside Berlin on Friday, putting an end to months of delays for the 5 billion euro ($5.5 billion) landmark plant.

The gigafactory, which is critical to Tesla CEO Elon Musk's plans to dethrone Volkswagen as the European market leader, was due to open last summer.

With a 25% share of European electric vehicle (EV) sales to Tesla's 13%, Germany's top manufacturer has the upper hand in Europe.

Dietmar Woidke, the state premier of Brandenburg, said at a press conference that the project was "a tremendous step forward," and that the Tesla facility would be a key industrial and technological driver for Germany and the region.

According to unions, some 2,600 of the plant's projected 12,000 workers have been hired so far, and Tesla is in talks with a number of local component suppliers to source as much as possible locally, reducing wait times and prices.

Volkswagen announced on Friday that it will invest around 2 billion euros in a new facility near its Wolfsburg headquarters to produce the Trinity, the first of a new generation of electric vehicles for the German automaker, with the building set to begin next year.

The 536-page conditional building permit granted to Tesla on Friday does not guarantee the electric vehicle pioneer can begin production right away. It must first demonstrate that it meets a number of criteria, including water usage and pollution reduction.

Only then will Tesla receive its long-awaited operating permit, allowing it to begin rolling out the 500,000 battery-powered vehicles it plans to build each year at its new plant in the small town of Gruenheide.

After meeting orders in Europe from its Shanghai manufacturing in recent months while awaiting approval for the site, Tesla is now able to deliver its Model Y automobiles to European customers sooner and more affordably.

Tesla intends to demonstrate compliance with the imposed conditions within the next two weeks, according to Axel Vogel, Brandenburg's environment minister, while complaints might be lodged during the next month.

Tesla's next hurdle will be to ramp up production as rapidly as possible, which Musk said would take longer than building the facility during a fair on-site in October.

Local environmentalists have long feared that the facility will have a harmful influence on the area's ecosystem.

Several public discussions largely focused on one element, slowed the process, with Musk voicing frustration with German bureaucracy on multiple occasions.

The facility, which Tesla has started building under pre-approval licenses, will also contain a battery plant capable of generating more than 50 gigawatt-hours (GWh) per year, far surpassing European competitors.

Musk stated that batteries for on-site cars will first come from China, but that bulk manufacturing at the German battery plant will begin by the end of next year.

h/s: Reuters