By
Svetlana Soroka
April 18th, 2024
News that the German factory site of US-based EV maker Tesla would soon start commercial production sent TSLA stock rallying.
Tesla (NASDAQ: TSLA) stock surged by more than 7% on Monday, February 28th, following a positive development concerning its German factory. The electric vehicle manufacturer is reportedly close to securing approvals from German authorities, to start commercial production at its new factory outside of Berlin. As a result, Tesla shares ended Monday at $870.43.
Furthermore, reports from Germany also state that Tesla wants to manufacture no less than 500K vehicles annually at the site. In addition, the EV maker also intends to produce batteries alongside those cars at the “Gigafactory Berlin” location. According to estimates, Tesla will be creating at least 12,000 jobs at its Grünheide, Brandenburg-based factory.
Potential Friction Between Musk & German Organized Labor
Tesla CEO Elon Musk will reportedly have his hands full with employee unions as the Gigafactory continues to take shape. This is because the outspoken businessman has a history of clashing with unions and workers over production-related issues.
Some years back, the National Labor Relations Board (NLRB) judged that Tesla violated labor laws when it fired a union activist. Musk seemingly compounded this with a tweet from 2018 which read:
“Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing?”
Generally, organized labor wields more power and influence in Germany. In fact, according to prominent German news website Der Spiegel, employees at the new factory have already elected a “works council”. Der Spiegel also went on to cite Birgit Dietze, the head IG Metall district of Berlin-Brandenburg-Saxony as the source of its report. IG Metall is widely acknowledged as one of the most powerful trade unions in the world.
Water Issue
Another hurdle that Tesla faces surrounding its new German factory is that of its water utility contract. In fact, this issue is expected to be litigated in an administrative court hearing between environmental groups and the EV maker on March 4th. The argument is whether the Brandenburg environmental ministry conducted sufficient legwork before issuing a license to the local water utility. This was allegedly part of the terms included in a contract fulfillment with Tesla, which may have been premature.
Furthermore, according to Reuters, the aggrieved groups in the lawsuit also point out the vast amount of water the Tesla plant potentially requires. In the groups’ opinion, the EV manufacturer will use enough water capable of supporting a 30,000-person town. Should the environmental groups emerge victorious, Tesla would have to wait for the water utility to negotiate with local authorities. This also likely means that the company may have to source the required volume of water needed to run operations at its new plant from elsewhere.
Besides the German Factory Update, Tesla Stock Also Got A Recent Boost From the Panasonic Announcement
Recently, Japanese consumer electronics giant Panasonic also announced a deal with Tesla. The former would start producing powerful but energy-efficient 4680 batteries for Tesla vehicles. Panasonic said it would start producing as soon as possible, and have working batteries in effect by Q1 2023. Furthermore, the Japanese multinational conglomerate also stated that production will be at its expanded Wakayama plant in western Japan.