The announcement by the state of Brandenburg ends months of delay for the $5.5 billion plant.
The Gigafactory is seen as crucial to Tesla’s ambitions to displace the European market leader Volkswagen and the go-ahead comes after the proposed facility was blocked last year.
Volkswagen currently has a 25 per cent share of the European EV market while Tesla has around 13 per cent.
Tesla will certainly be better placed to compete with VW once the plant is up and running but the new factory will also be a major industrial and technological driver for Germany and the region. So far 2600 of the total 1200 workers needed for the plant have been hired and the company has started talks with suppliers.
VW is already responding and is planning to spend 2 billion euros on a new factory near its Wolfsburg headquarters to make the Trinity, the first of a new generation of electric vehicles. Construction is due to start next year.
And while the factory has been given the go-ahead it is conditional on Tesla proving that it is able to fulfil numerous conditions, including in water use and air pollution control.
With the VW and Ford both committing enormous sums to future EV investment Tesla has to hope that this new factory is up and running as quickly as possible. To date it has been supplying its European customers from its factories in China.
And while building the facility will be a big achievement scaling up production is likely to take even longer. The factory will also include a battery plant that’ll be capable of generating more than 50 gigawatt hours (GWh) per year – something its European competitors can only dream of.