Tesla chief Elon Musk announced on Tuesday that the electric vehicle pioneer would bring its first European production site to the heart of Germany by building its first plant in Berlin.
Mr Musk made the announcement as he received the Golden Steering Wheel award from Bild, Germany’s most popular tabloid newspaper.
A person familiar with the matter said Tesla was going to “the heart of the autos industry powerhouse” and would build its Model 3 and Model Y vehicles at the site, aiming to start production in 2021.
Mr Musk has long said that Tesla would build a gigafactory in Europe, but no country had been announced until Tuesday. It follows the company’s expansion into Shanghai, where Tesla’s first Chinese-made Model 3s are now rolling of the production line.
The person familiar with Tesla’s plan said of Germany: “It’s where the best cars in the world have been made for decades. It makes so much sense to have our base there.”
Mr Musk sang the praises of German engineering in 2016 when Tesla acquired Grohmann Engineering, a specialist group for automated manufacturing.
“We want to make Germany, essentially, a part of Tesla,” he said at the time. “This represents a significant endorsement of German technology.”
Berlin is not, however, the epicentre of German car production. Volkswagen’s Wolfsburg headquarters is 228km to the west, while Stuttgart, home to Daimler, Bosch and Porsche, is 632km south-west.
But Berlin has become the centre for Germany’s push into new mobility services. When Daimler and BMW teamed up to create a new joint venture, it based the group in Berlin. VW’s ride-hailing group, Moia, is also based in Berlin.
Tesla’s jobs page says it is seeking to service and energy installation personnel in Germany for the Gigafactory 4.
Mr Musk floated the idea of a German plant on Twitter last year, but had not mentioned the country’s capital by name. Instead, he said “perhaps on the German-French border makes sense, near the Benelux countries”.
While Tesla’s sales have not significantly dented those of the traditional German carmakers, the speed with which it has managed to ramp up production has applied pressure on the likes of VW, BMW and Daimler to accelerate their electrification plans.
Last month, Mr Musk even attracted the praise of VW chief executive Herbert Diess, who said he had a lot of respect for Tesla and considered the firm a serious competitor.
That comment came after Mr Musk defended the German boss on Twitter, saying Mr Diess was “doing more than any big carmaker to go electric”.
The entrepreneur also praised Porsche’s all-electric Taycan, which is seen as a major rival to Tesla’s Model S.
The Palo Alto-based firm will face competition from the broader Volkswagen Group, which has made the biggest commitment to electrification of any major carmaker, as the industry prepares for strict EU emissions regulations next year.
VW is planning to produce more than 22m electric vehicles in the next decade, and its first mass-market electric vehicle, the ID. 3, began rolling off a production line earlier this month.
The German firm has also formed a joint-venture with the Swedish battery-maker Northvolt and is building its own battery plant in Salzgitter.
Last week, German auto bosses met with Angela Merkel’s government in Berlin, and urged the administration to do more to install charging points across the country, to boost demand for electric cars.