Tesla chose Berlin over Britain due to Brexit concerns

LONDON – Britain missed its chance to host the first European factory of U.S. electric vehicle pioneer Tesla because of Brexit, Chief Executive Elon Musk said in remarks reported on Wednesday.

The company had earlier said it chose a location near Berlin for a new design center and plant to make batteries, powertrains and vehicles, offering a major boost to the German capital.

Berlin’s minister in charge of economic affairs, Ramona Pop, said the move could create 6,000 to 7,000 jobs in production alone, with hundreds or even thousands more in areas such as design, software or research.

“Brexit made it too risky to put a Gigafactory in the UK,” Musk told Auto Express.

Britain’s vote to leave the European Union has hurt foreign investment because the country’s future trading relationship with the EU is still not clear, more than three years after the referendum.

For its part, Germany hailed Tesla’s decision to build its first European factory in the country, days after the government said it would boost subsidies for buyers of electrics cars.

The company will also set up an engineering and design center in Berlin, Musk said at the Golden Steering Wheel event on Tuesday. He wrote on Twitter that the new plant “will build batteries, powertrains & vehicles, starting with Model Y.”

German Economy Minister Peter Altmaier called the announcement a “glorious success” for the country’s attractiveness as an auto industry location, especially in the race to develop and produce electric cars and batteries.

Altmaier said there had been competition for the plant among European countries in recent months, but denied that the government had offered any financial support to Tesla.

“So far, subsidies haven’t been discussed,” he told reporters in Berlin. “It’s clear that Tesla will be treated the same way as all other automobile companies if it invests in Germany and creates jobs here.”

Still, Tesla’s announcement comes just a week after German officials and auto industry leaders agreed to increase by half the existing government incentives for electric vehicles with a list price of up to 40,000 euros ($44,500) — an incentive Tesla can expect to profit from indirectly.

The subsidy will also be extended from the end of 2020 currently to the end of 2025, and the government and industry agreed to aim for 50,000 publicly accessible charging stations nationwide by 2022.

Musk said that the plan is for the factory to be built near Berlin’s new airport, which is located just outside the city limits in neighboring Brandenburg state and currently slated to open next year after years of delays.

“We definitely need to move faster than the airport, that’s for sure,” Musk said.

German automaker Volkswagen, which last week began mass production of its ID.3 electric car, welcomed rival Tesla’s decision to build the factory on its home turf.

“I’m happy that Elon is, let’s say, pulling us, but I think the German industry is really now strongly investing,” said Volkswagen CEO Herbert Diess, speaking alongside Musk at Tuesday’s event. “And we will keep you alert.”

The Associated Press contributed to this report.