Tesla urgently needs to make its electric cars cheaper. And their plan is to produce batteries in Germany

Tesla will take the production of batteries for its European Tesla Model Y to Germany. This is what the German press agency DPA assures, information that has been echoed by German media such as Handelsblatt. “From battery cells to vehicles, everything must be produced in one place,” a spokesperson told DPA.

For now, the statements remain somewhat cautious. The company talks about a three-digit investment (speaking of millions of euros) and that the decision will be confirmed “if the framework conditions are adjusted”. It must be taken into account that Elon Musk already assured in 2020 that they would raise “the largest battery factory in the world” in Germany which, of course, has not been carried out.

Tesla’s intentions are to make the production of the Tesla Model Y as cheap as possible in order to face European competition. Right now, the company has to import its batteries to Germany from the United States, an environment that is also complicated in production due to the tariffs that the country has raised on components that arrive from abroad.

If consolidated, Tesla aspires to produce batteries worth 8 GWh, a figure that is far from the 50 GWh it aspires to produce. Stellantis with CATL in Aragon.

Between the bad and the worst

If we take the month of October as a reference (the last analyzed by ACEA), Tesla has fallen almost 40% in sales in Europe in the first eight months of the year. The figure has left the company with 117,000 units sold compared to the 192,439 units it had registered last year in the same period of time.

Obviously, its weight in the market has also fallen, to the point that it has been reduced by almost half. Right now, 1.3% of the cars purchased in Europe are Tesla vehicles when the company reached a market share of 2.2% and in 2024 it will make the Tesla Model Y the best-selling car in the world. Suzuki, Nissan or SAIC (owner of MG) have overtaken Tesla this year.

However, 2025 is being a fateful year for the company. Especially in Europe where Elon Musk’s political positioning has squandered the brand image in countries like Germany and France. The company is facing new proposals from its rivals that are close in price and already offer a real alternative to Tesla cars.

To solve it, and no smaller, more affordable versions on the horizonTesla has launched the Standard versions of its Model 3 and Model Y. They are versions with reduced equipment that try to reduce prices to keep both cars as attractive options. At the same time, yes, the price of the rest of the versions has increased to increase the gap and force the customer who does not want a shortened version to spend more money.

The announcement also comes in a strange context in the European Union. media like Bloomberg They emphasize that the announcement has been made at a time when solutions are being sought to lower the limits of polluting emissions, but the truth is that European manufacturers They still need to sell many electric cars even if the measures proposed by the European Commission were approved.

What is true is that Tesla is manufacturing its batteries in the United States but they have had to face an extra cost for them because the country has raised harsh tariffs on all components arriving beyond its borders. Although Tesla has been one of the least affected manufacturersthe extra cost appears to be high enough for the company to invest in Europe.

And Tesla itself has pointed out that producing batteries on our continent continues to have such a high price that its profitability is doubted. Therefore, the only reason for Tesla to continue investing in Germany and not opt ​​for other European countries such as Spain (as it has done CATL with Stellantis or the Volkswagen Group) is because It already has part of the structure assembled in the German country and it would be a matter of increasing the productive land on their land.

Furthermore, it is to be hoped that the European Union will further pave the way for attract investments in terms of battery production. Our continent is still far behind the United States but, especially from China and the most renowned attempts have been a total failure like Northvolt.

It remains to be seen to what extent this movement allows Tesla to make its vehicles cheaper and continue to stand up to increasingly stronger European manufacturers. And some Chinese companies that hope that the negotiations between their country and the European Union to lift tariffs come to fruition. What Tesla is surely looking for are more stable policies than those of the United States, something complex in such a changing geopolitical context.

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