Tesla Continues To Ramp Up Its Berlin Plant

While Tesla has not officially confirmed its plans to set up a second mega-factory in Shanghai, following Reuters' first revelation that the company is planning to set up a second mega-factory in Shanghai, on the other side of the Eurasian continent, Tesla has confirmed that it submitted a new application for industrial land purchase to local authorities in Berlin on May 5, local time, in order to increase the company's competitive edge in the European electric car market.

Tesla buys land all over the place

Tesla has formally submitted an application to purchase 100 hectares of industrial land adjacent to its Berlin superfactory, according to a land purchase application obtained from the local governing bodies by the German state radio stations of Berlin and Brandenburg.

Among Tesla's currently operating superfactories, the Berlin plant, which only opened in late March this year, covers 300 hectares, second only to the Austin, Texas plant (830 hectares), which opened on April 8, and larger than the Shanghai plant (80 hectares), which is considered Tesla's global production hub.

If we combine the newly acquired land, which is the size of 140 soccer fields, Tesla's Berlin plant will cover five times the size of the current Shanghai plant.

As the land is owned by the local government, it is expected that Tesla will be able to close the deal at a lower price. Although the local government has refused to disclose the price of the land, but according to the previous transaction price of the land, Tesla needs to pay roughly 13 million euros for this.

According to Tesla's planning and positioning for the Berlin factory in 2020, the Berlin factory needs to take on the role of the entire European market parts transfer as well as the starting point for vehicle sales. Considering the currently planned annual production capacity of 500,000 vehicles and the power battery factory only accounts for half of the existing factory area, Tesla's new purchase of 100 hectares of land is expected to be used mainly for storage area and for the construction of a transfer station.

Similar to Tesla's previous Berlin factory, which was repeatedly rebuked by environmental protection agencies over water issues, the site adjacent to the factory has also been restricted by the relevant agencies, and it is expected that Tesla will not be able to start construction on the site until June 2023 at the earliest.

In addition to the land purchase in Berlin, as previously reported, the K02 sketch plan for the Shanghai Lingang Advanced Manufacturing Area was adjusted in late January this year, with the oversized plot K02-08, covering 70.6 hectares, planned for industrial use. As the site is close to the Shanghai factory, the area of about 71 hectares is also similar to the 80 hectares of the Shanghai factory, so it is interpreted by many as the site for the "second factory" in Shanghai.

However, Tesla officials have yet to confirm the site or the second factory in Shanghai. As previously reported, the announcement of the land use rights for state-owned construction of a site in Nai Town, Pudong New Area, Shanghai, the land access industry is similar to new energy vehicle manufacturing and is located near the second phase of Tesla's Shanghai Super Factory. However, there was no information on the final transaction of the site.

Capacity climbing difficulties and quality defects

The biggest impetus to support Tesla's global land purchase is undoubtedly Tesla's climbing sales.

On April 21, Tesla announced its first-quarter earnings, showing that total revenue for the quarter rose 81% year-on-year to $18.756 billion; 310,000 new vehicles were delivered in the quarter, up 68% compared to the same period last year.

Specifically in the EU market radiating from the Berlin plant, Tesla's strong position is even more evident. In March alone, Tesla's single-month sales in the EU27 were as high as 23,000 (Model 3) and 19,000 (Model Y), which not only firmly occupies the top spot in the sales list of new energy vehicles in the European market, but even in the full series sales list the Model 3 and Model Y are the first and third respectively, even surpassing the Volkswagen Golf's 16,800 units.

However, the opposite of Tesla's high progress in Europe is that the Tesla Berlin factory in the capacity climbing stage is also facing the same quality of mass production failure and capacity climbing speed too slow old problems.

Although the Berlin plant's planned annual production capacity of 500,000 units, but until early April, the plant offline only 350 units of Model Y per week, as of early May Tesla's weekly production capacity is still hovering around 1,000 units. According to a report by Germany's AutoWeek, citing internal employees, the Berlin plant will only be able to start a two-shift production rhythm since June at the earliest, and annual production is expected to be just 30,000 units throughout 2022.

The primary factor limiting the Berlin plant's capacity climb remains the lack of qualified workers. According to the local labor bureau, the Tesla factory currently employs just over 3,000 people, a far cry from the 12,000 employees planned at full capacity.

In addition, although the Berlin plant uses 4680 cells, CTC technology (Cell to Chassis) and integrated die-casting technology as promotional gimmicks. But as of now, only the Austin, Texas plant, which has been in operation for a month, is capable of producing 4680 cells worldwide, and the Berlin plant is still dependent on the 2170 cells exported from the Shanghai plant. It is expected that the Berlin plant will need to wait until June or this fall before it can independently produce the 4680 cells needed for the Model Y performance version.

On the other hand, as the Berlin plant began a slow capacity climb and new cars were delivered, the previous praise for the excellent quality of German-made Tesla was shattered.

At a ribbon-cutting ceremony at the Berlin plant on March 22, Musk hand-delivered 30 Model Ys to the first European customers, and the flawless quality of the Model Ys was interpreted as a lesson learned by Tesla, which had successfully avoided the poor quality of the Fremont and Shanghai plants at the beginning of production.

However, since April, new Tesla owners in Germany and Austria have continuously found several German versions of the Model 3 and Model Y with quality problems such as large seam gaps, uneven paint spraying, and scratches in the paint.

According to feedback from some European users, the problem vehicles are particularly concentrated in the March 31 batch and are suspected to be the result of Tesla's desire to rush to brush up on delivery figures before the end of the first quarter. In addition, according to a report by German media teslamag, although the Model Y delivered at the ribbon-cutting ceremony at the end of March this year bore the name of a production version, all the vehicles were in fact manually reworked by production line workers.

Even Musk himself, in a talk show with YouTube sensation Sandy Munro early last year, confessed that for perfectionists, they should order before pre-production begins or after capacity creep is complete.