Tesla has clear path for first German plant – state premier

(Bloomberg) — Tesla Inc.’s factory near Berlin faces no major hurdles before getting the final green light to start producing electric cars next year, according to the premier of the state where it’s being built.

Public hearings into the plant east of Berlin in the state of Brandenburg were off to a rocky start and have taken nearly two weeks instead of two days. Environmental activists and local residents have grilled authorities on hundreds of issues from deforestation and water usage to increased truck traffic and noise pollution.

Despite the drawn-out process, Brandenburg Premier Dietmar Woidke isn’t concerned and expects the project to progress as planned.

“As of now, I know of no problem that would stand in the way of the construction permit,” Woidke told Bloomberg News at the state government’s headquarters in Potsdam. “My assumption is that a legally sound permission is possible here.”

The plant, Tesla’s first in Europe, is slated to start production next summer and could assemble as many as 500,000 cars a year. Several structures have already been erected at the site in Gruenheide, which Chief Executive Officer Elon Musk visited last month.

The factory is a major investment in the former communist region and a test for Germany’s efforts to speed up its notoriously slow-moving bureaucracy.

Musk announced the plan to challenge the likes of Volkswagen AG, BMW AG and Daimler AG’s Mercedes-Benz in their own back yard less than a year ago. Despite hurdles, including concerns about breeding wildlife, the project has remained on track.

Tesla’s investment dovetails with the state’s growing focus on cleaner transport and renewable energy. Rolls-Royce Holdings Plc is developing low-emissions aircraft engines in the state surrounding Berlin, and BASF SE is producing components for car batteries there.

Talks are underway to bring more big-name companies to Brandenburg, Woidke said, declining to provide specifics.

“We don’t go public with the beginning of every talks,” he said.

The state currently has renewable energy capacity — predominantly wind power — equivalent to 130% of its needs, an incentive for manufacturers that are under pressure to lower their carbon footprint, Woidke said.

To be in position to better leverage its clean-energy resources, the state is lobbying Chancellor Angela Merkel’s government to reduce a mandatory, “green levy.”

German consumers and companies alike pay mandatory charges on all power consumed to support the build out of clean energy. The surcharge has helped make German electricity the most expensive in Europe and is pushing up the potential costs of companies like Tesla to tap wind and solar, said Woidke.

Brandenburg and EON SE’s Edis unit are in talks with Tesla to supply the plant with renewable energy, said the Social Democratic premier without being more specific.

Using green power locally to support industry would cut the costs of Merkel’s sweeping plan to build a “super highway” grid taking green power from Germany’s Baltic and North Sea coasts to industrial areas in the south. Furthermore, fostering local consumption would counter resistance to local wind parks, he said.

Pipeline Support

Energy and investment are closely tied together in Brandenburg, which is grappling with the loss of thousands of jobs from phasing out coal. The state is a major supplier of lignite, with open-bit mines dotting the Lausitz region near the Polish border.

Germany sees natural gas as critical to meet its future energy needs. The controversial Nord Stream gas pipeline, which will bring Russian gas directly to Germany, will make landfall near Brandenburg.

Woidke remains a supporter of the project, despite growing pressure to target the pipeline as part of the response to the poisoning of Russian opposition leader Alexey Navalny. While the Kremlin needs to come clear on the attack, putting the pipeline on ice may not be the right answer, he said.

“Everything must be done to get Russia to unreservedly clear up the Navalny case,” said the state premier, an agronomist trained in former communist East Germany. “On the other hand, I am against following this impulse to say we are now ending this project in order to harm to Putin.”


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