Tesla CEO, Elon Musk, recently revealed plans to open a second Gigafactory somewhere in Europe. Sources close to TSI indicate this could be just north of Prague, Czech Republic.
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Construction on the Gigafactory 1 in the aptly named, Electric Avenue, Sparks, Nevada, is currently under way and when finished, will be the biggest building in the world. It is an incredible endeavor and would allow Tesla to improve the speed at which they create their lithium-ion batteries. The factory will power itself using renewable energy, employ 6000 staff and leave minimal impact on the environment.
Musk recently toured Germany after an acquisition of a German company who would help in the design and development of the Gigafactory, and revealed that he plans a second factory in Europe. He explained that the new factory would create both the lithium-ion batteries currently produced in Gigafactory1 and also electric cars:
“This is something that we plan on exploring quite seriously with different locations for very large scale Tesla vehicles, and battery and powertrain production — essentially an integrated ‘Gigafactory 2,’”
The factory would allow Tesla to drastically ramp up production of their current range of cars, and start to match the bigger names in the automobile market in terms of production; something that hasn’t been done before.
Why choose Prague?
Firstly, the Czech Republic has huge deposits of lithium; the core ingredient of the Tesla battery. Elon Musk said previously that the plan for the Gigafactory was to perform every part of the manufacturing; roll in raw materials and roll out working batteries. In Dubi, northern Bohemia, about 330,000 tons of lithium lies underground and work has started in the area to begin the extraction. Otto Janout from a company called Geomet, received the permits and cite Elon Musk as his reason for excitement over lithium extraction in the region.
Secondly, everything is cheaper in the Czech Republic due to their use of the Czech Koruna, except perhaps, ironically, imported electrical devices. In any case, land is cheaper, skilled labor costs a lot less and the resources needed to maintain and run the factory would be far cheaper than almost anywhere else in Europe. Labor, for example is considerably cheaper than in the US. The average wage for a US employee is around 50,000 dollars per year, compared to around 15,000 dollars for your average Czech employee. And in case you were wondering, a 2015 study by the OECD ranked countries by their education systems and the Czech Republic came 21st, compared to the US’s 29th place result.
The Czech Republic is also ideally located in the heart of Europe. Whilst many think of the Czech Republic as being in the Eastern Europe bloc, Prague actually sits west of Vienna and has quick access to all of the major European hubs, such as Munich, Milan, Paris, London and Zurich. In the area north of Prague, many abandoned industrial zones could easily be demolished to make way for the huge factory. These industrial zones are a throwback to the Soviet era before the Velvet Revolution in 1989 kicked them out.
Some sources close to TSI have revealed that whilst nothing has been set in stone, there is a high chance of Tesla locating its new Gigafactory just north of Prague, Czech Republic. The government would welcome them with open arms and might even offer tax breaks and other incentives to close the deal. Other locations mentioned include Hungary, which also doesn’t use the dreaded Euro, Poland and Romania. Although, the Czech Republic looks the most attractive investment at the moment and government officials have been in contact with Tesla to invite them over. The announcement is due to be made next year and Europeans will be waiting with bated breath.