Brexit saga sway Tesla away from Britain to Berlin

Brexit saga sway Tesla away from Britain to Berlin
  • Brexit deadlock made it risky for Tesla to establish a “Gigafactory” in Britain.
  • Tesla’s Model 3 will be built near Berlin's new Brandenburg international airport.
  • California-headquartered electric car manufactures to is building a China plant near Shanghai.

The Tesla chief executive, Elon Musk, told a UK car magazine that due to uncertainties over the potential outcome of ongoing Brexit saga, his company consensually has decided to build Tesla’s first European factory in Germany rather than Britain.

Musk further elaborated (on Tuesday, November 14) that his firm has chosen a new plant location near Berlin to build the Model Y crossover, handing a major stimulus to the German capital. He added that Brexit saga made it too risky to establish a manufacturing facility in Britain.

Tesla founder argued that everyone across the world knows the fact that the best cars in the world are made in Germany, including Audi, BMW, Mercedes-Benz, Porsche, Volkswagen and many others. He argued that everyone aware of the fact that German car engineering is outstanding and that's the part of our decision why we chose Berlin over Britain. He also announced to establish a design and an engineering centre in Germany.

In 2014, just two years before the Brexit referendum took place, Tesla’s chief had told the same car magazine that, he is considering Britain for an R&D centre and potentially a first European facility as well.

Tesla's arrival in the UK would have provided a much-awaited stimulus to the country, which has witnessed automotive production softening this year. Recently, the UK-headquartered Dyson stated that it was scrapping plans to build an electric vehicle, though the company is planning to make them in Singapore.

The billionaire entrepreneur said that Brexit uncertainty played a role in Tesla's decision to choose Berlin over the UK for its first European factory in Berlin and also revealed that company's European battery facility would be established on the outskirts of Berlin, Germany.

Meanwhile, Germany’s Minister in charge of economic affairs, Ramona Pop commented that “this move would create around 6000 to 7000 jobs in manufacturing alone, together with thousands of other ancillary jobs such as design, software and research as well. However, the UK’s department for business boycotted for any comment on the report about Tesla.

In his November 12, 2019 tweet, he announced that the company will build powertrains & vehicles starting with Model Y along with batteries. He also revealed that production would start in 2021 and said that "I come to Berlin a lot – Berlin rocks!"

 

The electric car manufacturer also unveiled its first Vehicle built in Shanghai facility and a regulator of the company (on Wednesday, November 13), granted permission to the firm to start mass production at the facility located in outskirts of Shanghai. The Shanghai facility is Tesla's first outside US site and a test for Musk's bid to prove that the EV maker can sustain profitability as he bets on Chinese electronic demand.

A global research house has recently stated that low-cost production for Tesla at the Shanghai facility would provide the company with a Porsche like margin in China.

The prolonged Brexit related uncertainties have softened foreign investment in the UK, primarily because of the UK's future trading relationship with the EU bloc is still in doldrums, even after over three years of the Brexit referendum. Major automaker Nissan has also commented that any kind of UK's departure from EU in which firms faces tariffs would be unsustainable and could put on risk the entire business model as well.

The UK is going to conduct a General Election in December this year to break the deadlock. British PM Johnson has already said that substantial foreign investment would return to the UK once terms of Brexit agreement have been settled.

Will December general election unlock doors for the foreign investors in UK businesses?

 

On December 12, the UK will finally conduct a long-awaited general election, which became imperative and was required since June 09, 2019, the day on which Ex-PM Theresa May got her gamble to hold a snap election, wrong. And rather of getting a majority at the House of Commons she lost some of her colleagues against the Labour and other opposition parties. Now PM Johnson is going to contest the similar snap election on December 12, 2019, as his effort wasn't enough to get consent for Brexit through the British Parliament. Despite having negotiated a deal done with the EU administrators, he doesn't have enough strength at the House of Commons to get his deal approved through the British Parliament. Conducting another snap election to secure a majority at the House of Commons is the only available alternative to deliver on Brexit.

However, in the opinion polls conducted on October 29-30, 2019, it was predicted that there is a 50% probability of PM Johnson-led Tories winning a majority at the House of Commons, a 42.5% chance of a hung parliament, and a 5.5% chance of a Labour party gaining the majority.

One of the probable cases, in which PM Johnson's party attains majority at the House of Commons is considered to be more market-friendly and suitable for businesses as well, as the present opposition Labour party's broader manifesto is comparatively radical. It wants to steer the UK's economy in the opposite direction through large-level Nationalization, tax rate hikes, stringent reforms and regulations for the country's businesses.

However, in case no-one gets an absolute majority at the House of Commons or the case of Hung Parliament, it would also have a negative effect on the UK’s economy, as it will further bring Brexit-related uncertainty and that will lead to a prolonged political crisis in London, the most since World War II.

Yet a clear picture on the December 12, election is due to come by the mid of December 2019, but Brexit delay and political uncertainties are already costing Britain's growth possibilities. As, if Tesla manufacturing plant would have come in the UK, it could have boosted the job market and could have landed thousands of jobs for the people after series of job cuts the auto industry has been witnessing since the beginning of 2019.

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