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Initially, Tesla was planning to launch the production at Berlin Gigafactory in July 2021. However, now, because of battery issues and regulatory challenges, another date is set.
Tesla Inc (NASDAQ: TSLA) has decided to postpone the start of manufacturing at its new Berlin gigafactory. The company’s CEO Elon Musk has given the plant’s team six more months to complete working on the project. According to German trade magazine Automobilwoche, the delay resulted from issues over battery pack production as well as some regulatory issues.
Tesla first revealed its plans to build a gigafactory near Berlin back in November 2019. One of the major reasons the company decided to choose Germany as the location for its new gigafactory is the outstanding German engineering. As we reported at that time, Tesla also got approval from the key officials in the German cabinet. Initially, Tesla was planning to launch the production at Berlin Gigafactory in July 2021. However, now another date is set.
Battery Issues Affect Tesla Berlin Gigafactory Plans
Tesla has been working on new, more efficient EV batteries since the beginning of 2020. It intended to first use them at the upcoming assembly plant near Berlin. But it has turned out that Tesla is a year to 18 months away from mass production of next-generation battery cells it wanted to make in-house. While Tesla has been building the batteries in California, Elon Musk warned earlier about the difficulty of bringing them to market.
Tesla CEO said:
“Scaling up of the production process is much harder than proving something out on a lab bench.”
With larger cylindrical 4680 format cells that reduce the number of parts needed, new batteries will allow lowering the overall vehicle’s weight. However, because of the larger capacity, it is more difficult to produce these cells. Although promising to increase efficiancy, the new cells still remain largely unproven.
In addition to battery issues, Tesla has faced administrative holdbacks. In particular, the company made changes in the application that local authorities should approve before the production starts. And the approval process was delayed because of environmental groups that are opposing the project because of water and forest use. To build the plant, Tesla cleared forests that were home to a local population of hibernating sand lizards. Back in December 2020, Tesla tried to relocate all the lizards from its site, but many of them were already in their winter dens. Therefore, German Court stated that Tesla’s relocation was not enough to save the species.
Tesla Stock’s Performance
Following the news about the delay, Tesla stock plunged in the pre-market trade.
Yesterday, TSLA shares closed at $709.44, or 4.79% up. However, as of the press moment, it is 1.01% down, $702.26 per share.
Tesla’s market cap totals $683.425 billion. Year-to-date, TSLA stock is 0.53% up.
On April 26, Tesla announced its Q1 2021 results with a record net income of $438 million. Besides, the company also reported a record $10.39 billion in revenue at earnings of 93 cents per share. Notably, Tesla sold 10% of its Bitcoin (BTC) taking out $272 million in net proceeds.