Tesla plans to invest around €100 million to start producing battery cells at its European plant near Berlin within the next two years.
GigaBerlin’s chief, André Thierig, announced on Tuesday that the investment will allow the plant to produce eight GWh of battery cells starting in 2027.
“Vertical integration at its best! From cell to vehicle in one factory — unprecedented in Europe! The future is great,” he wrote on X.
The decision to begin battery cell production in the Old Continent comes just a day after the European Commission announced new incentives for battery production within the bloc.
While reducing its ambitious target of having all vehicle sales be electric by 2035, the EU announced a $1.8 billion ‘Battery Booster’ program aimed at accelerating production of fully EU-made batteries.
The institution will “support European battery cell producers through interest-free loans,” with “additional targeted policy measures” to follow in coordination across Member States, it said in a statement.
Plans for Grünheide
Speaking with local media outlet F.A.Z., Thierig noted that the goal is to increase the value-added depth of GigaBerlin, in which Tesla “will have then invested almost one billion euros [$1.17 billion] in the cell factory.”
The battery cells set to be produced in Grünheide starting in 2027 will have enough storage capacity to supply roughly 2,000 electric cars per week — about a third of the 7,500 vehicles currently produced in seven days.
While not disclosing the supply chain for the planned production, Thierig said that Tesla “we will not source everything from overseas,” as it would “go against our goal of becoming more resilient here.”
Additionally, by establishing cell production in Grünheide, a “substantially three-digit number” of new jobs will be created in the coming months.
Tesla currently employs around 11,000 people at the Grünheide site, of which about 400 work in battery production.
According to the plant manager, all permits for battery cell production are already in place, and starting operations in Grünheide will not increase the facility’s water usage.
Tesla Battery Cell Production
In recent years, Tesla has concentrated on cell production in the US, partly due to the more attractive incentives offered under the 2022 Inflation Reduction Act.
In the Grünheide battery plant, the company currently assembles modules — with cells from its factory in Austin — into batteries for vehicle production.
“We hope that by 2027 better conditions for cell production in Europe will be established,” Thierig said.
Tesla’s plans to produce battery cells in Grünheide date to 2020, when CEO Elon Musk announced that the company would build a battery cell factory near its European plant.
Musk estimated an initial annual capacity of up to 100 GWh, which could reach 250 GWh, while adding that “at that point, it would be the largest battery cell plant in the world.”
However, the plans did not follow through.
Manufacturing in the EU
PowerCo, the Volkswagen Group’s battery manufacturing unit, announced on Wednesday that it has begun production of its Unified Cells in Europe at its Salzgitter gigafactory.
The newly produced cells will now be delivered to VW Group brands for final road testing, with their market debut scheduled for next year.
In parallel, PowerCo is also establishing battery production facilities in Valencia, Spain.
Meanwhile, Chinese battery manufacturer CALB has invested €2 billion in the construction of a lithium-battery factory in Sines, Portugal, which is scheduled for completion in 2028.
The world’s largest battery manufacturer, CATL, currently produces in Germany and Hungary.
The Chinese giant is expanding its footprint to Spain through a joint venture with Stellantis Group.
