Tesla faces delay in Germany, deals with Chinese regulators

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Tesla Inc (NASDAQ:TSLA) could face a six-month delay in starting production at its new Gigafactory in Germany. Production was slated to start in July, but a German newspaper reports that some issues in obtaining essential building permits and environmental approvals will delay that start date.

Gigafactory Berlin faces challenges

Citing the German auto industry paper AutomobilwocheElectrek reports that Tesla has faced issues with the company that supplies water to businesses in the Berlin area. Additionally, environmentalists who didn’t want to relocate some animals due to the automaker’s deforestation of the site opposed it. Tesla also terminated the engineer known as “Mister Gigafactory,” who was heading up the Gigafactory Berlin project.

Despite the issues, Tesla CEO Elon Musk said on the automaker’s earnings call last week that he expected production at the German factory to begin this year. He explained that the company was “building factories as quickly as we can” and that the facilities in both Berlin and Texas were “progressing well.” Musk added that they expect to have the first limited production from both factories this year and volume production next year.

However, Automobilwoche not reports that Tesla won’t begin production at Gigafactory Berlin until January 2022. The newspaper said Musk officially gave the team six more months to complete the work and get the factory up and running. It added that the regulatory approval needed for the project is part of the reason for the delay because Tesla told authorities that it would make changes to its application.

Importance of Tesla’s factory in Germany

Automobilwoche also said construction delays are impacting the project, including for the facility that will produce battery cells at Gigafactory Berlin.

Gigafactory Berlin is a critical part of Tesla’s plan because it will bring the Model Y to Europe. Electrek notes that it will also introduce a new generation of the Model Y that uses the automaker’s new battery pack technology and new 4680 battery cell. Gigafactory Berlin is also expected to play a major role in Tesla’s growth for the next several years and speed up the adoption of electric vehicles in Europe.

Tesla faces regulatory scrutiny in China

Meanwhile, in China, Tesla faces new scrutiny over the safety of its vehicles and complaints about its customer service. Sources told Reuters that the automaker is engaging more with regulators there and beefing up its government relations team.

Manufacturers typically attend meetings with Chinese regulators, but sources told Reuters that Tesla has been absent from those meetings in past years. However, they also said that Tesla executives had attended at least four policy discussions in recent weeks.

Tesla is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders’ families.