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Tesla is expected to demonstrate impressive achievements with its first factory in Europe. If it happens, how will its stock react?
Tesla is ready to break new grounds in Europe, with its soon-to-be-built gigafactory in Germany. The company, led by Elon Musk, is popular for setting surprising goals for itself. Most of the time, these declarations by Musk are written off as pipedreams as people point out that they are a little too lofty. However, the company’s success in China is worth considering whenever there is doubt about its capabilities. The question now is, will Tesla be able to replicate that success in Germany and how will stocks react?
Tesla in Germany
In November 2019, Elon Musk announced the company’s plans to erect its first European gigafactory in Germany, near Berlin. By December, Tesla reached an agreement with the Brandenburg state government, on the terms of a contract for land in Gruenheide. The large expanse is said to be 300 hectares (741 acres) and is roughly the size of 200 football fields put together.
Supposedly, Tesla had it easy with the government in the state as they were a little too eager to grant the company permission for erection. After losing out to Leipzig on a BMW factory many years ago, Gruenheide welcomed Tesla with open arms. Speaking on the development, Mayor Arne Christiani says with Tesla comes a fresh opportunity for growth in the area.
“The investment is a unique opportunity. It gives young people with a good education or a university degree the possibility to stay in our region – an option that didn’t exist in past years.”
However, Tesla is facing a few issues.
Pre-Erection Problems for Tesla in Germany
Already, people have started to sweep the area for possible unused bombs buried beneath the ground since the Second World War. Because of the size of the land, carrying out a thorough sweep will take some time. Germany has agreed to solely handle the removal of explosives. However, Tesla’s time table says that the sweep must be completed latest by the end of February.
There’s also the problem of wildlife. Firstly, the area currently has colonies of bats that are currently hibernating in trees on the same land. The creatures are expected to hibernate until February or March. However, Tesla has to find a way to relocate the bats or forfeit its timeline.
In addition to bats, the company also has to remove snakes and wolves completely, before erection.
The speed with which Tesla completed the China factory shocked the world. Within a year, Tesla began and completed its factory and has already started delivering made-in-China Model 3 vehicles. In the past three months, Tesla (TSLA) stock has more than doubled.
Since last year, many market analysts, including skeptics, have become quite bullish on TSLA as the company’s books have increased dramatically. Since stocks also skyrocketed on account of the China factory, the gigafactory in Germany should also do well for TSLA.