Tesla’s German EV Factory Gets Green Light in Boon to Musk's European Expansion

(Bloomberg) -- Tesla Inc. received final approval for its factory outside Berlin, bolstering the carmaker's push to expand in Europe's fast-growing electric-vehicle market.

Authorities in the state of Brandenburg announced the decision Friday after months of delays due to red tape and concerns over the factory's water usage.

“This is a new chapter in our industrial development,” Brandenburg State Premier Dietmar Woidke told reporters in Potsdam. “We need big projects like Tesla.”

The long-awaited decision is a boon to Tesla Chief Executive Officer Elon Musk, who plans to challenge the likes of Volkswagen AG, BMW AG and Mercedes-Benz AG on their home turf just as they broaden their own EV offerings. The facility in one of the world's most competitive auto markets is designed to eventually make batteries and as many as 500,000 cars a year.

Tesla needs to secure an operating license to be able to start production, a process that is expected to take roughly two weeks. The automaker still has to meet dozens of requirements listed in the permit, including setting up emissions-monitoring equipment and putting in place measures to protect groundwater reserves and prevent accidents.

German politicians have backed the factory in the small town of Gruenheide because it promises thousands of jobs in a region that has little heavy industry. Local police are preparing for an opening party at the facility attended by Musk on March 22 or March 23, the Tagesspiegel newspaper reported this week.

Court Case

Musk has warned that ramping up the plant will be the difficult, partly because it will use lots of new technology. The CEO told locals in October that Tesla targets making between 5,000 and 10,000 vehicles a week by the end of this year. Tesla has hired about 2,500 of as many as 12,000 workers for the site.

Environmental groups have sued local authorities over concerns the plant would use too much water in a region that's suffering from prolonged droughts due to climate change. The case went to court earlier Friday.

Officials say the large majority of the local population is in favor of the factory and Brandenburg authorities are backing efforts to drill for more water.

“We are aware of the water scarcity,” Brandenburg Environment Minister Axel Vogel told reporters. “The state does what it can.”