GAME OVER! How Germany is getting Crushed by Tesla
00:00 - 00:08 - Introduction
00:00 - 02:52 - From the Past to the Present, and then the Future
02:52 - 04:08 - Building the Gigafactory
04:08 - 06:52 - Tesla Appeals to Europe
06:52 - 08:02 - Possible Obstacles
For years, German car companies such as Mercedes-Benz and Audi have dominated the luxury car market. When you asked someone what country made the highest-quality cars you’d often hear, “Germany.” The country was just synonymous with being, “The best.” These cars have often been top-of-the-line and loaded with impressive features. Some have been hybrids, many have used gasoline. These German cars have lagged in creating all-electric options and now are risking getting lapped by Tesla as it continues to impress the luxury car marketplace with its highly desirable options for drivers after a nice luxurious ride. German carmakers are trying to close that technology gap and, they hope, overtake Tesla before it’s too late, but it may already not be achievable as Tesla is starting to crush these companies. It is already gaining popularity in Germany and has some big plans for further expansion into the country that will only further solidify its appeal within the nation.
Germany is home to one of the fastest highways around, the Autobahn, and it will soon also be home to Tesla’s newest Gigafactory. The electric automaker plans to start building cars outside Germany's capital of Berlin this summer and it has domestic automakers there metaphorically sweating at the thought of their industry being upended. Originally German automakers would say things about Tesla like, “These guys in Silicon Valley - they have no clue about engineering, about building really beautiful and great cars. So we don't have to worry,” but as time has gone on Tesla went from a company with 23 billion dollars in shares--a quarter of that of Germany's largest carmaker, Volkswagen--to a corporation with a market cap of over $800 billion. Yeah, that’s three times what Volkswagon is currently worth! All of this makes it especially scary to German carmakers as they witness Tesla opening a new factory right in the heart of Germany.
Building the Gigafactory
Musk’s newest Gigafactory will take the town of Grunheide in Germany from a quiet town of 9,000 to a location with 40,000 workers daily--about half of them will most likely commute in from nearby Berlin. The Gigafactory will produce batteries, drive trains and eventually assemble 500,000 of Tesla's trademark electric vehicles per year. It will be Tesla's fourth Gigafactory after Reno, Buffalo and Shanghai--and the first-ever in Europe. Why did Musk choose Gunheide for Tela’s new Gigafactory? It is right by the autobahn, on a train line, and near Berlin's new airport. Plus, there were permits in place already for a major factory as about 20 years ago Grunheide had approved a BMW factory that never was built. Tesla also isn’t having to spend too much, in the long run, to make their factory as Germany announced they are one of 11 companies that'll receive billions of dollars’ worth of government subsidies aimed at increasing battery cell production within the country. Once it is complete, the Gigafactory will be quite an impressive sight and the amount of income it will bring to Grunheide will surely serve the town well.
Tesla Appeals to Europe
Another reason Tesla is crushing German carmakers with their gasoline-powered cars is how Europe wants to shift towards a zero-carbon economy. The country wants no overall C02 output and having electric cars that don’t pollute the air is a major step in that direction. The European Union has openly stated it was zero net carbon output by 2050 and road transportation currently accounts for ⅕ of carbon emissions. Having big SUVs and sedans that pollute the air has been a specialty of German car manufacturers and those kinds of vehicles clearly have their days numbered. The kinds of fines the EU and Germany will have in mind for companies that are major polluters could theoretically put car manufacturers out of business if they don’t literally clean up their act! Last year Volkswagen missed its carbon emissions target for its fleet by just 0.5 grams per kilometer. As a result, the EU punished the company by making it pay a fine worth about $121 million. Now, imagine the fines a gas-guzzling SUV might cause a German company to get--it’s not a pretty picture.
In fact, one EU car-maker, Fiat Chrysler actually almost went out of business due to these fines. The EU threatened to fine it $2 billion because its car fleet's carbon output was too high. Desperate to not be insolvent, the company made a deal with none other than Tesla. Tesla agreed to pool its fleet with Fiat Chrysler’s emissions. Tesla now gets hundreds of millions of dollars a year from Fiat Chrysler and guess what they used that money for? Yep, to fund the construction of their German Gigafactory.