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They obviously needed to get one built in Europe sooner rather than later to boost marketshare there and stay ahead of demand without needing to ship from China or the US, but why Berlin? Does anyone know if they got subsidies out of it?

I think Berlin is a great choice, because it excels at the metrics that matter most in constructing a new gigafactory. I believe the most critical metrics are: - cost of construction, including cost of land: extremely low in Berlin - cost of labour/wages: extremely low in Berlin - standard of living: very high, healthy - reachability: near Airport, highways, railroad - location within Europe: Germany/Berlin is perfectly in the middle of Europe with great railroad/truck connections to all other - regulation/friendliness to car industry: exceptional in Germany, as auto industry is the world's biggest - talent: world-class in Germany - law and order/rule of law: one of the best in the world

I agree with the rest of your list, but German wages are not "extremely low" compared to, say, Romania.

Romania's infrastructure is crap, though. Shipping those cars would probably be quite a bit more expensive. Also, the workforce is on average less educated and way fewer highly educated foreigners would be willing to relocate to Romania.

Source: I'm Romanian, I've been to Germany repeatedly.

I think it makes sense. Berlin is very spacious and connected to a lot of cities via rail.

Berlin is about 230 km (140 miles) away from Wolfsburg, where Volkswagen is located. Pretty sure there is infrastructure and are suppliers nearby.

Probably will attract a few people from Volkswagen. I personally know people who commute to WOB from Berlin, since they just cant stand the town. (And you cant blame them). Although to be fair VW acknowledges the undesirability of their hometown and has also opened Dev offices in Berlin.

Talent. It's why you see clustering of industries.

Except that most automotive talent is clustered in the south of Germany (greater Stuttgart and greater Munich), not in Berlin.

If you do a quick job search, those places have the most jobs in Auto and also the highest wages.

Wolfsburg ist 200km away from Berlin. Cologne has Ford, Hesse has Opel and continental, although the center of gravity is in the south, it's not like the industry doesn't have a certain spread throughout the country.

In America, 200 years are a long time; in Europe 200 km is a long distance.

200 km is the same distance everywhere, how "long" it actually ends up depends on the supporting infrastructure, and that's usually pretty good in Germany.

1 hour by train, 2 hours by car...

That’s “far” by local standards (I can be two countries over).

As a local, I would disagree...

That saying is meant for a leisure trip, 200km is close by for almost any kind of industry these days.

It's a long way to commute!

Berlin has a very large tech industry, a lower cost of living, and lower wages.

Depends how you want to use the word tech.

For the US it usually means some successful SV FAANG type software company.

For Germany it's usually some successful hardware engineering company (Siemens, Bosch, Mercedes, Arri, Infineon, Continental etc.). Those companies can afford to pay the equivalent of FAANG wages in Germany albeit at a smaller scale.

Southern Germany has more experience and talent in the latter while Berlin has more software startups and web devs, similar to the former.

Berlin definitely also has a hardware engineering/embedded software scene. It's just that there is no single big company (or cluster of big companies) that dominates the market, but rather smaller shops that mostly do contract work or have some specialised product.

There is also a steady supply of students from that branch of tech - AFAIK AutoNOMOS Lab still exists and there are multiple universities in town that over computer science focused on embedded systems.

"Several years ago, Chancellor Angela Merkel said the one in every seven jobs in Germany were "directly or indirectly" linked to the [automotive] sector."


Germany is the home of Mercedes, BMW, and VW (which owns Porsche and Audi and is one of the largest car manufacturers in the world). Their economy is very dependent on the auto industry. They are also home to many automotive suppliers including bosch and kuka. They are also one of the largest markets in Europe.

So yeh it's all these reasons: logistics, infrastructure, talent. Plus they need German's to think of Tesla as a local brand. Imagine if Tesla is gutting market share from these other companies and they were in another country. It would engender resentment.

Plus Berlin is a cool city :-)

Well, but Berlin can't grow anymore... Building new apartments and houses basically cut in half because the rent control law.. To no one's surprise.. If telsa cant find the talent in Berlin. They will be out of lick because no one can't or want to move to Berlin...

What you said is just absolutely wrong. On every level. You are just repeating the propaganda of the landlord lobby.

First off, the number of building permits did actually increase more twofold (by number of apartments) between 2012 and 2018 (the first rent control law took effect in 2015)[1].

Secondly, the rent control law doesn't apply to newly constructed buildings. So suggesting it would somehow decrease incentive to build new apartments is ludicrous. In fact the opposite is true. If you want to have higher rents, you need to construct new buildings.

[1]: https://i.imgur.com/sPgCyTn.png - screenshot because direct links don't work on that page. Source: https://www.statistik-berlin-brandenburg.de

That article speaks of a 10% change for a 9 month period on a number that sometimes changed by more than 60% (2013 vs 2014) on a yearly basis in recent years.

In any case a 10% fluctuation can hardly be called "basically cut in half", as you put it. I am reading "10%" as "basically unchanged".

As it stands your argument is not even supported by the sources you are citing yourself.


Ahah! When just comparing the single month of September we can find a decrease of about 50% though, according to the article (couldn't find a source for the number though, see below). So at least we have a number like that if we make the window so small that the data we have is beyond useful.

A 50% fluctuation on a monthly basis is perfectly normal though. For instance there was a +120% change in April 2018 / April 2019 (1517 vs 3345)[1] in total permits on a per-apartment basis. You can find plenty of such fluctuations though when just looking at months.

The data is pretty much completely useless on a month-by-month basis and can easily be skewed by a few large projects.

Also I can't figure out where that article is pulling its numbers from, because it quotes "more than 1700 permits for apartments last year in September", while the official statistics[1] just have 1301 when counting any kind of permit. For completeness, here is the press release referred to by the article, which also doesn't contain any number like that: https://www.statistik-berlin-brandenburg.de/pms/2019/19-11-0...

[1]: https://www.statistik-berlin-brandenburg.de/publikationen/St...

Note: Kuka is basically chinese now, even moved operations to china.

Could be partially political. Close to federal power, far-ish (in a different state than) from other car companies. No idea if there's supplier or other partner concerns that align (some R&D stuff in Berlin maybe, if they plan on doing anything like that there? I know they work with some Berlin companies, but that doesn't seem so important). Would expect Brandenburg to give some kind of subsidy, but other states would too.

Cheap real estate. Cheap workforce from Brandenburg and possibly Sachsen.

On top of that Brandenburg government will definitely sprinkle some tax breaks.

East Germany still has lower wages.

Without knowing the backroom deals - Berlin is a nice choice for things because it's like 'East Europe wages' with 'West Europe capabilities'.

Germany is a very stable robust economy that might be their #1 'export source' - there's a lot of related knowledge - and in a 'cramped Europe' - the Berlin area is wide open.

FYI Berlin has 'wide avenue streets' which are totally unlike most other European places, sometimes it feels like Los Angeles and not Europe.

It might have been possible to go to Czech/Poland but there are just a large number of 'little things' that can go wrong over there, issues best left to those who know and operate the market well.

Compound this with the probable politics of the game and it makes sense.

In a way it's the most obvious choice.

I have heard that a working legal system is one way for a country to attract long term investment. There is less risk that some politician's friend ends up claiming your factory grounds.

There are ways yo try to "hack it" like subsidies or having personal relations with someone high up but I don't know how cost effective and long term they really are.

So if people want long term improvement, they should vote for a strong legal system instead of "I personally brought this factory here".

It's the 'legal system' - and everything else.

German/French car companies, with long and historic ties on many levels to say, Poland, can fathom the risk of going there, especially with a long term view.

Volskwagen can plan decades ahead in some facets.

It takes 'a whole team' i.e. government (local, Fed, EU), probably financing/banking on both sides, political buy-in etc..

But for a new US company to go to Czech ... is asking for trouble.

The difference between E/W Europe is definitely centred around competitive advantage and long-established industries - but I'd argue more than anything it's 'good governance' at every level, private and public. And it's the same all over the 'developing' world.

Bizarre that this pretty inoffensive comment got flagged to dead. I vouched for you.

If it doesn't say [flagged], it was not flagged. All comments posted by this account start out [dead], i.e. they're banned.

I see; thanks for explaining that.

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