In the long term, Tesla Giga Berlin will not suffer from the energy crisis that threatens all of Europe this winter. Even if, in the short term, the factory is affected by this, it does not carry any major risks in general.
In connection with the Russian attack on Ukraine and the partial refusal of Europe from Russian gas, the entire region is at risk in the winter of 2022. Although Europe already has effective solutions and continues to accumulate gas in storage, each country will face some restrictions on the use of gas during the heating period. Because Tesla Giga Berlin is in Germany, investors are worried about whether the energy crisis will affect manufacturing.
In preparation for the Q3 2022 Earnings Call, investors asked:
“We keep hearing of dire energy crisis in Germany this winter. What are Tesla's plans to combat power cuts? And will there be any delays in ramp-up in production from Giga Berlin because of this?”
Zachary Kirkhorn responded that based on the information the company currently has, Tesla does not see much risk to its Giga Berlin operations. Even if production declines for a while, it will only be a small and short-term in impact, and is completely unable to have a negative impact in the long term.
”I think two points on this question. The first is just that based on everything that we know, we don't see this as a large risk to the company. Even if production did go down for a period of time, this is in near term, it doesn’t have any impact on the long term of the company.”
Elon Musk made a remark that in reality, at the moment there is no indication that Tesla will have to cut production in Germany. It should be kept in mind that in reality, at the moment, Giga Berlin is not a major gas eater, since its production level is not yet high. The factory is currently producing over 2,000 vehicles a week and is aiming for 5,000 units per week by the end of this year or early next year. In reality, this is not yet a large production, so it will not require an especially large volume of gas.
Additionally, Kirkhorn said that Tesla is developing backup plans, although he did not elaborate further. He said that the company is working across the entire supply chain and almost all suppliers are ready for different scenarios. Kirkhorn stressed that the influence of the energy crisis in Europe on Giga Berlin production is not something the company is really worried about.
“And we put in place backup plans, and we're working through the supply chain as well. Nearly all of our suppliers are prepared as well. So, we'll see how this plays out, but it's not something that we're terribly worried about.”
© 2022, Eva Fox | Tesmanian. All rights reserved.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.