Sunday, November 17, 2019
Tesla builds its Europawerk near Berlin. In 2021, models of the electric car pioneer are expected to roll off the production line. Thousands of jobs wave. Party mood in politics and business. Risks are hidden – or overlooked.
"Attack is the best defense!" Also this Clausewitz ascribed rule of the war art may have driven Tesla boss Elon Musk to announce in Berlin the construction of a new automobile factory for electric cars in Germany. In the middle of the "cave of the global automobile lion". Completely unexpected, for Musk, as it were, a marginal note at the presentation of the "Golden Steering Wheel" to the electric pioneer. Ironically, when Tesla does everything to make the car autonomous and steering wheelless. In addition to the factory, Tesla is planning a development and design center for specialists in Berlin. Nothing else is known about this, probably the new small Tesla SUV should be developed here.
The factory mentioned in the Musk-PR-Talk "Gigafactory" is to be built on green meadows in the municipality of Grünheide, following the example of predecessor factories in Nevada and, most recently, Shanghai 38 kilometers south of Berlin in Brandenburg. Approximately 6,000 to 7,000 employees will produce batteries for electric cars and a model Y that has not yet been developed. Construction of the factory is expected to be in the first quarter of 2020, just a year later in the spring of 2021, the first cars to roll off the line. Breathtaking, a hitherto unprecedented wonder in the automotive industry!
A successful political coup?
Musk got the German car industry cold with his plans. Unlike politics and economics, which welcomed the planned settlement of Tesla euphoric. After all, it was the largest industrial investment in Brandenburg, with great prospects for future employment and prosperity in the region plagued by the decline of lignite mining. A successful political coup, all under strict secrecy. Reason to dream!
For real? As spectacular as this surprise coup by Musk and as successful as the Brandenburg state development policy was, the project must nevertheless face a sober economic assessment. Not to marry Musk's courage to entrepreneurial risk and the dreams of politics and business in Brandenburg, but to realistically assess the opportunities and risks of this spectacular market entry. What are the advantages of this project for whom? And how realistic is this project on the green heath? What are the risks of failure and why?
"And the winner is"
One thing is clear: the winner is Germany as a business location. Alternative locations such as France, the United Kingdom or the Netherlands, where Tesla vehicles are already being assembled on a job order basis, were lost. Obviously, countless German executives and engineers played best. The undisputed high level of performance of German industry seems to have been decisive for Musk's decision.
In any case, the real winner is also the state of Brandenburg, which was given preference by Musk over Lower Saxony and the Saarland. Like the example of Leipzig with its automobile resettlers BMW and Porsche, an automobile plant emits around three times its added value to the surrounding region. The municipality of Grünheide, which once competed to resettle a factory owned by BMW and then lost to Leipzig, now has the opportunity to become an economic development and growth center for the entire region. That creates hopes! The attractiveness of Berlin as a vibrant metropolis and specialist pool as well as its proximity to a major city airport also played a role in the Tesla location decision. And for the BER airport, the planned opening date for the Tesla factory in the spring of 2021 is a true "production schedule accelerator"!
But the winner is also the German automotive industry and the automobile location Germany. That's where competition comes in! The assessment of the planned Tesla settlement by the industry association VDA is clearly sporty and market-based: "We do not shy away from the competition, quite the contrary: the German automotive industry has grown in international competition and has therefore taken a leading position." The VDA proudly points out that the German automotive industry – manufacturers and suppliers alike – have already made massive investments in electromobility and that their e-model range will increase fivefold to 2023 by the year 2023.
Tesla has little to oppose with his narrow gauge range. And so we are at the risk of failure of the entire project – that is, the Tesla market entry in Germany.
The biggest risk is a misjudgment of the future market for e-cars in general, not just for Tesla cars; in Germany and Europe everywhere. All previous euphoric evaluations of future electromobility are based on the planned production figures of electric cars of the manufacturers. The media and the public are always taken for face value, that the paragraph actually developed as VW CEO Diess & Co. would like it.
That is to be hoped for, but unlikely. The offer of e-cars is not important in this case, but on demand! And customers obviously do not want electric cars so far. Up to and including October 2019, more than three million new cars were registered in Germany, but only 35,000 electric vehicles, including 9,301 from Tesla. The market share of e-cars in Germany is stagnating at around two percent. But not only here, that applies to all major automotive markets in the world. Even for China!
And another downside in the successful mixture of the Tesla project is added: About three quarters of all e-cars sold in Germany are hybrid cars, so have an additional combustion engine. Tesla does not know the combustion technology but not! Tesla does not have a single hybrid car in the program. His offer consists exclusively of high-priced e-cars with batteries. No wonder, because Musk is a genius in the computer world, he is not a "petrol head"!
The lack of supply of e-cars, the homeopathic sales in Germany and worldwide does not. An ad campaign by Volkswagen for advance payments on the new I.D.3 was sang and sang. Also, no cases have been reported so far, in which potential customers shook the work of the new VW factory in Zwickau and demanded their new I.D.3.
Dear God …
Tesla enters Germany and Europe as a "latecomer" difficult terrain. With the BMW i3 and the new models of the VW Group with the I.D.3, the Porsche Taycan in the upper market segment, the market is in full competition for an aging and safety-conscious clientele. Added to this are purchasing barriers in the infrastructure of e-filling stations and the range of batteries; for the route from Berlin to Grünheide and back of course no problem! And the young technology-savvy "pioneer consumers" often lack the money for the expensive e-cars. Seen from this: Maybe a night prayer helps, that in the following dreams do not become nightmares.
(t) Helmut Becker (t) Association of the Automotive Industry (t) Elon Musk (t) Tesla Motors (t) Electromobility (t) Brandenburg (t) Berlin (t) Automotive Industry (t) Corporate Strategies (t) Automakers