Tesla faces hurdles in Germany as locals vote against factory expansion

Manufacturer of electric vehicles Tesla failed to secure a local vote in favor of allowing a major expansion of the company’s battery factory and car assembly plant in Brandenburg, Germany.

German state broadcaster DWÂ reported for the first time about the vote and that Tesla would have to clear approximately “250 acres of forest in a rural community of less than 8,000 residents near a conservation area” for the expansion.

Tesla’s expansion plans in Grünheide, which is in the Brandenburg region about an hour’s drive from Berlin, included designs for a rail freight depot and warehouse facilities that could help Tesla avoid dependence on other logistics providers, including existing rail freight, and help them avoid production downtime due to parts shortages.

The vote is non-binding, according to New York Timeswho announced that the local authorities will try to find another solution.

The German factory temporarily halted production for about two weeks earlier this year, with executives citing local component shortages caused or exacerbated by Houthi militant attacks on ships in the Red Sea.

In the fourth quarter of 2023, Tesla announced that this facility, which it calls its Berlin-Brandenburg site, has annual capacity to produce 375,000 of the company’s Model Y cars. The company also said in its latest quarterly filing that its international manufacturing facilities, including in Germany, allow Tesla to “increase the accessibility” of its vehicles to customers in local markets by “reducing transportation and manufacturing costs and eliminating the impact of unfavorable tariffs.”

While Tesla remains the best-selling brand in Europe, it faces competition from more battery electric models than ever before in and outside the region.

Sales of new battery electric passenger vehicles in Europe rose 29% year-on-year in January, according to the European Automobile Manufacturers Association. Germany and France currently represent the two largest markets for all-electric vehicles in Europe.

Tesla sales accounted for 1.7% of the total passenger car market in Europe in January, including all-electric, hybrid and combustion engine models.

Tesla shares are down more than 20% year to date, but were trading steady midday Wednesday at around $193 a share.

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