A general view shows the new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 20, 2022.
A general view shows the new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 20, 2022. Reuters / HANNIBAL HANSCHKE

Elon Musk presided over the delivery of Tesla's first German-made cars to clients at the carmaker's 5 billion euro ($5.5 billion) Gruenheide plant on Tuesday, marking the start of the U.S. company's inaugural European hub and the biggest investment in Germany's car industry in recent history.

The 30 clients and their families received their vehicles on-site through a glitzy, neon-lit Tesla branded exit, crowding around as Musk arrived.

"This is a great day for the factory," Musk said, describing it as "another step in the direction of a sustainable future".

Chancellor Olaf Scholz, also in attendance, lauded the plant as a sign of progress and the future of the car industry.

Not everyone supports Tesla, however, with environmental groups gathering outside the plant on Tuesday with banners, pots and pans to express their concerns, ranging from the plant's high water use to the trees felled to build it.

Musk had hoped to begin output from the factory eight months ago, but local authorities in Germany said it had still been completed relatively swiftly despite licensing delays.

Tesla received the final go-ahead from local authorities on March 4 to begin production, provided it met several conditions, covering issues such as water use and air pollution control.

"Some people didn't trust Germany could do this," regional finance minister Joerg Steinbach told rbb radio, adding: "We showed the world."


The chosen Tesla clients will receive the Model Y Performance configuration, a vehicle costing 63,990 euros ($70,491.38) with a 514 km (320 miles) range, the company said, adding that new orders from the plant could be delivered from April.

Tesla said that around 3,500 of the plant's expected 12,000 workers have been hired so far.

The licensing delay meant Tesla had to service earlier European orders from its Shanghai factory, driving up costs.

"Makes a huge difference to capital efficiency to localize production within a continent," Musk tweeted.

At full capacity, the plant will produce 500,000 cars a year, more than the 450,000 battery-electric vehicles that German rival Volkswagen sold globally in 2021.

It will also generate 50 gigawatt hours (GWh) of battery power, surpassing all other plants Germany.

For now, Volkswagen still has the inside track in the race to electrify Europe's fleet, with a 25% market share to Tesla's 13%. Musk has said ramping up production would take longer than the two years it took to build the plant.

JPMorgan predicted Gruenheide would produce around 54,000 cars in 2022, increasing to 280,000 in 2023 and 500,000 by 2025.

Volkswagen, which has already received 95,000 EV orders in Europe this year, is planning a new 2 billion euro EV plant alongside its Wolfsburg factory and six battery plants across Europe.

But its timeline lags Tesla's, with the EV factory to open in 2026 and the first battery plant in 2023.

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