Tesla faces hurdle in Germany as locals vote to oppose factory expansion

• Tesla failed to secure locals’ vote to authorize a major factory expansion for its factory in Brandenburg, Germany.
• The plan included designs to build out a rail freight depot and storage facilities that could help Tesla avoid pausing production due to parts shortages.

Employees of the Tesla Gigafactory Berlin-Brandenburg work on a production line of a Model Y electric vehicle on March 20, 2023.

Electric vehicle maker Tesla failed to secure a vote among locals in favor of authorizing a major factory expansion for the company’s battery and car assembly plant in Brandenburg, Germany.

German state-owned broadcaster DW first reported on the vote and that Tesla needed to cut down approximately “250 acres of forest in the rural community of fewer than 8,000 residents near a nature conservation area” for the expansion.

Plans for the Tesla expansion in Grünheide, which is in the Brandenburg district about an hour drive from Berlin, had included designs for a rail freight depot and storage facilities that could help Tesla avoid reliance on other logistics providers including existing freight rail and help them avoid production pauses due to parts shortages.

The vote is nonbinding, according to The New York Times, which reported that local officials would try to find another solution.

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

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

While Tesla has remained a top-selling brand in Europe, it faces competition from more battery electric models than ever in and beyond the region.

Sales of new battery electric passenger vehicles in Europe increased 29% year over year in Europe in January, according to the European Automobile Manufacturers Association. Germany and France currently represent the two biggest markets for fully electric vehicles in Europe.

Tesla’s sales represented 1.7% of the total passenger car market in Europe in January including fully electric, hybrid and internal combustion engine models.

Tesla shares are down more than 20% year to date but were trading flat on Wednesday midday at around $193 per share.

Don’t miss these stories from CNBC PRO: