(Bloomberg) -- Almost 19 years after its founding, Tesla (NASDAQ:TSLA) Inc. has a car factory network that spans the globe.
The leading electric-vehicle maker officially opens its assembly plant outside Berlin on Tuesday, Tesla’s first carmaking plant in Europe. Chief Executive Officer Elon Musk and German Chancellor Olaf Scholz are both set to attend the official start of production at the 5 billion-euro ($5.5 billion) facility.
The factory -- first announced more than two years ago -- will boost Tesla’s capacity to make Model Y sport utility vehicles as Russia’s invasion of Ukraine drives up fuel costs and adds momentum to already fast-growing EV demand. The question for Musk, 50, is how quickly the company can ramp up output in the midst of industrywide supply chain challenges, including shortages of semiconductors and raw materials for batteries.
“The start of production is nice, but volume production is the hard part,” Musk said during a visit to the plant construction site in October. He said then that Tesla would target making 5,000 to 10,000 vehicles a week by the end of this year.
Tesla’s facility in Gruenheide is essential to Musk’s objectives to boost global production and capture more of Europe’s expanding EV market. He tweeted last week that he was working on a new “master plan” for the carmaker and wrote Monday that “scaling to extreme size” would be among the main subjects.
The factory opening is the culmination of a surprise announcement Musk made in November 2019 while accepting a car award at a glitzy event in Berlin, with the heads of BMW AG, Volkswagen (DE:VOWG_p) AG (OTC:VWAGY) and Audi in the audience. Vehicles will now roll off the production line in Germany’s automotive heartland, where Tesla now employs more than 3,000 workers.
Although Tesla moved quickly to construct the facility, it was beset by months-long permitting delays that at times exasperated the world’s richest person.
Concerns at the site centered around its environmental impact, with activists opposing tree-clearing and the effects the facility would have on wildlife and water supply. The latter issue could linger and factor into Musk’s expansion plans, with the local water authority warning last week that further development won’t be possible without additional extraction permits.
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