Tesla’s first European plant was supposed to open on July 1, but permit delays, lizards, and other problems have postponed it indefinitely

Tesla CEO Elon Musk visits the Gigafactory Berlin construction site on May 17, 2021.
Tesla CEO Elon Musk visits the Gigafactory Berlin construction site on May 17, 2021.

  • Tesla’s new factory outside of Berlin, Germany, was supposed to open on July 1.
  • Permitting issues and environmental activists have delayed the plant’s opening.
  • Tesla plans to churn out 500,000 cars at the plant, which is critical to its European strategy.
  • See more stories on Insider’s business page.

“Deutschland rocks,” Elon Musk told reporters during a September 2020 visit to the construction site of Tesla’s first European car plant. Nearly a year later, Gigafactory Berlin’s planned July 1 opening date has come and gone, and there’s no word yet on when it will open.

Since beginning work on the sprawling plant in early 2020, Tesla has faced setback after setback over issues like environmental impact and permitting. It all means that Tesla is way behind schedule in opening up the factory, the cornerstone of its European strategy where it plans to churn out half a million cars annually.

With traditional carmakers like Volkswagen, BMW, and Mercedes-Benz doubling down on electric cars and breathing down Tesla’s neck, the company likely wants to avoid any more stumbles. But it remains unclear when the plant will open its doors.

Elon Musk vs. German bureaucracy

Tesla has hit one bureaucratic slowdown after another since it broke ground in the small town of Grünheide, near Berlin.

In December, Tesla was forced to temporarily stop constructing parts of the plant after it failed to pay a €100 million deposit on time. In June, it had to resubmit permit applications to account for a battery-production facility. The public now has until August 16 to review the documents and file any objections, according to the Brandenburg State Office for the Environment.

An aerial photo of the Gigafactory Berlin construction site.
A drone photo of the Gigafactory Berlin construction site on May 30, 2021.

This whole time, Tesla has been building the factory under a series of provisional permits – at its own financial risk – as it waits for full approval from the environmental authority in Brandenburg. Theoretically, it would have to dismantle the plant if the project isn’t given the green light, and it’s unclear when Tesla will get full authorization.

Tesla has gotten fed up with the delays. In April, the company sent a letter to the Brandenburg state government complaining about the “irritating” approval process that had begun 16 months earlier, Bloomberg reported.

The problems haven’t gone unnoticed by Musk, either.

“I think there could be less bureaucracy, that would be better,” the CEO told reporters at the Grünheide site in May.

A battle over lizards

Tesla has also met fervent opposition from environmental groups who are concerned about the mammoth plant’s impact on the local wildlife and water supply. Activists have mounted demonstrations and gone through the courts to make their voices heard.

In February 2020, as Tesla prepared the site for construction, a German court ruled that the company had to temporarily stop clearing trees while it considered objections from the Green League. Courts told Tesla to suspend deforestation efforts again in December after activists complained that construction was disturbing the habitats of hibernating snakes and lizards.

Tesla Berlin Germany factory construction site forest
A view of the Tesla Gigafactory construction site in Gruenheide near Berlin, Germany, December 8, 2020.

Environmentalists are also worried about the plant’s effect on the local water supply since part of it is located in a drinking-water protection area. Tesla has revised down its water demands.

A delayed opening

While Tesla’s sky-high share price makes it the most valuable car company on the planet, it didn’t earn that title by selling the most cars. Far from it.

The company moved a record 500,000 vehicles in 2020. Some of the world’s largest automakers sell that many of a single model. Expanding production volumes and ramping up sales is crucial to Tesla’s future profitability, especially as legacy manufacturers and startups begin to flood the market with new EVs.

So when will Gigafactory Berlin get up and running?

In April, Musk said Tesla could start limited production at the plant by the end of the year. But, as Musk himself admits, he’s not the best with predictions.

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Tesla is on a collision course with Germany’s biggest union and neither side is likely to back down

Tesla Berlin Gigafactory
Tesla’s Berlin Gigafactory will be the cornerstone of its European strategy.

  • Tesla is building a giant plant in Germany, but it hasn’t yet made nice with the mighty auto union there.
  • IG Metall will likely make life difficult for Tesla, which hasn’t agreed to the industry’s collective wage agreements.
  • A battle with the union could threaten Tesla’s ambitious plans for the European market.
  • See more stories on Insider’s business page.

As Tesla works to get its mammoth new factory in Germany up and running by the summer, disturbing delicate reptile habitats may be the least of Elon Musk’s worries.

After sparring with locals over everything from water supply to deforestation, there may be an even larger threat looming: Germany’s largest union.

Tesla hasn’t made many friends of labor activists in the US, and the 2.2-million-strong IG Metall isn’t likely to go down without a fight, experts told Insider. A prolonged battle over contracts with the group – which wields considerable political influence and social capital – could derail Tesla’s ambitious plans for the European market.

A standoff over contracts

Virtually every car company operating in Germany is a member of an employers’ association, and IG Metall – which represents metalworkers in the auto industry and other sectors – negotiates industry-wide contracts with the group instead of bargaining with each company individually. That system gives the country’s unions considerably more negotiating power than their US counterparts, which vote to unionize plant by plant.

But there’s a catch – joining the association isn’t required by law, it’s only customary. And Tesla has made every indication it’s not interested in following that deep-rooted norm.

Gigafactory Berlin getty 1
Tesla aims to complete Gigafactory Berlin by July.

The carmaker has caught heat for union-busting tactics in the US – the National Labor Relations Board ruled in March that Musk must delete an anti-union tweet and reinstate a fired employee who was part of an organizing drive – and it has signaled it’s not keen on working with unions in Germany either.

Tesla ignored a letter from IG Metall inviting a dialogue last year. And it went to great lengths to pacify disgruntled union members at Tesla Grohmann Automation, an engineering firm it acquired in 2016, without entering the industry’s collective agreement. Instead, the carmaker fended off a strike by giving workers a deal that was comparable to the industry-wide wage (plus stock options).

It could try to pull the same play at Gigafactory Berlin.

The stakes are high for IG Metall

But IG Metall likely wants to avoid that scenario at all costs, Stephen Silvia, a professor at American University whose research focuses on comparative labor relations, told Insider.

Allowing a massive non-union plant to build cars in Germany would set the dangerous precedent that companies don’t need to engage in collective bargaining, he said. It would also mean thousands of members would potentially go without the contractually enforced job security, wages, and benefits the rest of the industry enjoys.

Read more: The true disrupter in the auto industry isn’t Tesla – it’s Fisker

Moreover, IG Metall stands to lose bargaining power with other automakers if it can’t get Tesla to play ball, said Arthur Wheaton, an automotive industry expert at Cornell University’s School of Industrial and Labor Relations. It’s especially crucial that IG Metall preserve all the sway it can at a time when carmakers are pivoting to EV production, which, Wheaton said, requires roughly 30% fewer workers than traditional auto manufacturing.

“It’s all about labor density,” he said. “Every plant that opens that’s not unionized hurts [IG Metall’s] power.”

The union can make life difficult for Tesla

Given the stakes, IG Metall is likely to employ a whole menu of strategies to bring Tesla to its side. And there’s no guarantee that any of it will bear fruit. Amazon, for example, has for years resisted calls from Germany’s service-sector union, Verdi, to recognize collective bargaining agreements.

Silvia, who has spoken to the union about its plans, anticipates a public relations campaign and protests to exert political and social pressure on Tesla to “be a good corporate citizen.”

“It’s very difficult to force a completely unwilling company,” Silvia said. “They’ll just have to make [Tesla’s] life as uncomfortable as possible.”

Gigafactory Berlin Getty
Tesla plans to manufacture 500,000 cars per year at the factory.

IG Metall could also organize rolling strikes, though there are restrictions on how long they can last and when they can occur. Grey-area “guerilla actions” – like slowing down work at a Tesla supplier where IG Metall might have members – may also be in the union’s playbook, Silvia said.

IG Metall may also try to influence Tesla’s leadership from within. The carmaker will be required by law to allow Gigafactory Berlin employees to form a works council – a group that represents the interests of the factory’s workforce – and IG Metall could make sure it’s stacked with members, according to Silvia.

Wheaton, however, thinks IG Metall’s main weapon for putting the squeeze on Tesla is blocking the completion of the factory altogether. IG Metall could work with environmentalist groups to slow down construction, he said.

Since beginning work on Gigafactory Berlin in early 2020, Tesla has faced setbacks from environmental activists and regulators over issues like deforestation, water usage, and the well-being of wildlife surrounding the construction site. And it has encountered delays over procedural problems having to do with work permits and deposits.

The stakes are high for Tesla, too

The carmaker likely wants to avoid any more stumbles as it looks to get the plant, which forms the cornerstone of its European strategy, online by July. Tesla aims to eventually build 500,000 European-market cars per year and produce its next-generation battery cells at the facility, and a protracted struggle with IG Metall could impede those plans.

Getting the factory up to speed as quickly and as smoothly as possible is critical for Tesla as it works to scale production worldwide and defend its market share from a growing number of EV-making rivals, most notably German automaker Volkswagen.

Tesla did not return Insider’s request for comment on whether it is open to joining the collective wage agreement.

Gigafactory Berlin
Tesla is “just another company” to IG Metall.

IG Metall, for its part, said it’s approaching Tesla as it would any other manufacturer looking to open up a facility in Germany. Union representatives did not respond to Insider’s request for an interview but the chairman of IG Metall Berlin Jan Otto told Insider in an emailed statement that he doesn’t “feel any frustration towards Tesla and the new Gigafactory in Grünheide.”

“It is our job to organize people and negotiate collective agreements once we have reached more than 60/70% of the workers. In the past, we have organized thousands of workers in new and old companies,” Otto continued. “Tesla is a big player, but for us, it is just another company.”

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