After all, Germany wasn’t the only option on the table. There were rumors last year that Elon Musk was in talks with the UK government to open a Gigafactory in Somerset in the UK. Some years ago, the UK was a preferred manufacturing location for non-European car brands because it had direct access to the EU market but more relaxed labor laws.
Several Japanese manufacturers, including Toyota, allegedly built their manufacturing in the UK for that reason. The country was even dubbed the “Japanese aircraft carrier floating off the coast of Europe” in 1992 by Jacques Calvet, who was then head of PSA Group, a French automaker that was the country’s largest industrial company at the time (and now part of Stellantis).
Sadly, Brexit has reduced the UK’s utility in this respect, so that only the reduced red tape at the manufacturing stage remains. There is now a lot more bureaucracy when it comes to trading with the EU from the UK, and that was reportedly a major factor in Honda closing its Swindon factory after 35 years.
Officially, bureaucracy is not why Tesla walked away from the EU money he was being offered, though, even if you can bet there would have been many hoops to jump through to get it. Musk stated that he had turned down the $1.28 billion in EU funding for the Berlin Gigafactory because “It has always been Tesla’s view that all subsidies should be eliminated. But that must include the massive subsidies for oil & gas. For some reason, governments don’t want to do that…”
You should always take such statements from Musk with a pinch of salt, particularly considering his record on labor relations, which isn’t as benevolent as his environmental message. However, he does have a point about subsidies. There are a lot of complaints about governmental assistance for EVs and green energy, but the oil and gas industry hasn’t exactly been free from monetary incentives over the years either.
Activist group Paid to Pollute claims the UK has provided nearly £14 billion ($18.7 billion) in subsidies to oil and gas since 2016 alone. In the US, the figure is more than this every year, with an Oil Change International report in 2017 putting the American total at $20.5 billion annually.
There is also more to attract business than just hassle-free labor, financial kickbacks, and free trade agreements. The UK does have considerable other opportunities in the brave new world of EVs. Start-up Britishvolt broke ground on the UK’s first battery Gigaplant in August, a £2.6 billion ($3.5 billion) project that aims to create 8,000 new jobs and manufacture 30GWh of batteries from 2027 onwards, enough for 300,000 EVs a year.
The UK also has its own supplies of lithium, a key element in most rechargeable battery chemistries, which Cornish Lithium and British Lithium hope to exploit. This is both from mining and brine, geothermal underground water that is high in lithium content. These companies even argue that there will be enough local lithium to electrify the entire UK car fleet. Electric hypercar maker Rimac has its design office in the UK too, because of the talent available in the country.
Tesla does need to think about where it is producing cars for the right-hand-drive market. This doesn’t just include the UK, but also Japan, South Africa (plus several adjacent countries), Australia, New Zealand and (the big ones) India, Indonesia, Pakistan, and Bangladesh. Malaysia and Thailand also drive on the left. In fact, the sum of right-hand-drivers is 2.8 billion people – 36% of the world population.
Right now, the Tesla cars coming into the UK are being made in China, which ironically is considered to be a quality improvement over those manufactured in America. The Chinese Model 3s now also come with LFP batteries, which are cheaper, more tolerant of being charged to 100%, and contain no cobalt, so are free of the moral issues that mining that mineral poses. But even if China is a cost-effective place to produce cars, transporting them around the world is hardly great for the environment.
Tesla will almost certainly iron out its problems in Germany sometime in 2022. But you do have to wonder if Elon Musk is considering it a rather bitter pill dealing with the bureaucracy that he has faced setting up the Gigafactory in Berlin. Even when the plant opens, this is likely to continue, looking at past history in Europe. Perhaps, as the EV market continues to grow, local UK manufacturing could end up back on the table. Brexit or no Brexit, the UK is still a very lucrative automotive market after all.
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