Tesla Revises Germany Plan to Have Car Plant Cranking in a Year

(Bloomberg) -- Tesla Inc. will rework plans for its factory near Berlin to appease environmental critics and ensure its first European outpost can start producing cars in about a year, a senior local government official said.

The electric-car pioneer has faced criticism from local citizens concerned about deforestation and water usage related to the plant's construction. Initial setbacks included a court-ordered temporary halt in February on clearing trees and a potential fine for ramming piles into the ground before receiving the necessary permits.

But new blueprints to be presented this week or next will address some of those concerns by reducing the amount of fresh water required and waste water created, said Joerg Steinbach, the economy minister in the state of Brandenburg, where the facility will be located. Following an eight-week process of public review and response, an open hearing will take place by early September, he added.

“We expect a proposal that in sum will be more environmentally acceptable and thereby even more approvable,” Steinbach said in an interview at his office in the city of Potsdam near Berlin. “I assume that within the first half of next year cars will be rolling off the conveyor belt there.”

Representatives for Tesla did not reply to requests for comment.

Electric-Car Hub

Tesla Chief Executive Officer Elon Musk is moving into Germany's heartland to challenge Volkswagen AG, BMW AG and Daimler AG's Mercedes-Benz as the country targets a massive increase in electric-car sales. It's a bold move, given that battery-powered cars are only starting to take off in Europe's biggest economy. And when it comes to major infrastructure projects, the country is notorious for red tape, which could irk the independent-minded Musk, who's used to getting his own way.

Once complete, plans for the project potentially worth as much as 4 billion euros ($4.5 billion) call for eventual employment of 12,000 people and the assembly of 500,000 vehicles annually. For Brandenburg, it's a landmark deal to bring Tesla to the forest-filled area surrounding Berlin. The state has struggled to attract high-profile investors and jobs, and the arrival of the U.S carmaker has the potential to create an influx of other large employers.

Brandenburg wants Tesla to become a stepping stone in the region's plan to become an electric-car hub. Together with neighboring Saxony-Anhalt and Saxony, the state will benefit from billions of euros of structural aid as coal mining and power generation are phased out, providing a potential source of financing to help attract companies.

BASF SE in the southern part of the state, for example, plans to make cathodes for electric batteries from 2022, employing 2000 workers. Before the end of the year, Steinbach hopes to announce at least two more companies setting up shop, but he declined to specify in which industries.

Unconventional Practices

Brandenburg state officials say they're well aware that time is of the essence because Tesla has a technological advantage over its German rivals that it wants to exploit quickly. The U.S. carmaker wants to finish the plant just outside of Berlin in less time than it took to build a new plant in China, which went up in less than a year.

Steinbach's staff are in daily contact with representatives from Tesla, often including weekends. On his desk is a laundry list of issues, from power and train connections to cutting through bureacratic paperwork, he said.

As a manager at German pharmaceutical giant Schering and later dean of Berlin's Technical University, Steinbach is no stranger to complex supply chains, new technologies and manufacturing processes. He has had frequent stints in China and the U.S. Yet he admits that relations with Tesla, whose CEO recently had a public row with California authorities over a plant shutdown there, can be trying.

“It requires a lot of flexibility,” said Steinbach, adding that Tesla's unconventional business practices sometimes clash with Germans' propensity for highly structured planning. “I find out-of-the box great, but at some point it becomes exhausting.”

Even so, nothing should stand in the way of creating a new auto-industry hub just outside of the nation's capital now, the 64-year old trained chemist says.

“I think we're now past the point of no return,” Steinbach said.

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