Why Tesla Is Coming to Germany

When Tesla boss Elon Musk announced to build an electric car factory near Berlin, at first it surprised an entire industry. Why Germany - and why Berlin of all places?

In the current " Bloomberg Innovation Index 2020", Germany takes first place. The Federal Republic replaces South Korea, which was the most innovative nation worldwide for six years in a row.

In the ranking compiled annually by Bloomberg, more than 200 economies around the world are assessed, among other things, according to their research and development expenditure, their production capacity and the concentration of high-tech companies. They are then assigned an index score, with a maximum of 100 possible points. This year, Germany takes first place, with 88.21 points, as the Statista graph shows.

Positive factors in the ranking include the spending of German carmakers Volkswagen, BMW and Daimler, which invest billions in electric mobility and autonomous driving. Germany's mechanical engineering capacities and the high number of high-tech companies also contributed to Germany's top position in the ranking. It seems "Made in Germany" is a label that also attracts customers.

Tesla's decision to set its Gigafactory in Berlin, Germany for that does not come as surprise.

The country has a rich history of automobile manufacturing. In the past, Germany has been known to be the home of the inventor of the internal combustion engine, Nikolaus Otto (Aversa et al. 2017). The nation is also known to be an engineering hub with skilled labour and sophisticated technology (Reinhold and Thomsen 2017; Rauwald and Hull 2019). Also, Berlin offers a ready local market and a positive supply chain (Trumbull 2018). These aspects would accelerate the sale of Tesla’s electric cars in the local and international markets. To investigate these local processes, an in-depth and interdisciplinary literature review will have to be done. Further, Germany is historically an engineering hub owing to its novel development of an internal combustion engine. In a time when the steam engine was proving costly and fuel-inefficient, Nikolaus Otto invented a new engine design to address the issues with the former design. Subsequently, globally reputable care models such as Volkswagen, BMW, Audi, Porsche, and Mercedes-Benz represent the quality of engineering in Germany and had a global impact.

Data Resources

Following data sets present Berlin as an ideal location for a manufacturing firm. These findings can best be communicated through graphical presentations and infographics. The Growth for Knowledge (2020) presents the purchasing power of Germans. Also, Transparency International (2020) reports Germany's transparency and corruption scores. These elements are important determinants of Tesla’s presence in Berlin. While the former depicts the ability of Germans to buy Tesla products, the latter sheds light on the prevalence of the rule of law and transparency.

Transparency Score for Germany:

https://www.transparency.org/en/countries/germany#

Stock Market Capitalisation: https://www.theglobaleconomy.com/Germany/stock_market_capitalization_dollars/

Economic Freedom:

https://www.heritage.org/index/country/germany

Germany Automobile Industry:

https://www.statista.com/topics/3202/automobile-industry-in-germany/

Germany National Security:

https://www.whitecase.com/publications/insight/national-security-reviews-2018-germany

Global Infrastructure Ranking: https://lpi.worldbank.org/international/global/2018?sort=asc&order=Infrastructure

Germany Purchasing Power:

https://www.gfk.com/press/germans-per-capita-purchasing-power-amounts-to-eur23766-in-2020

References

Aversa, R., Petrescu, R.V., Akash, B., Bucinell, R., Corchado, J., Chen, G., Li, S., Apicella, A. and Petrescu, F.I., 2017, ‘Something about the balancing of thermal motors,’ American Journal of Engineering and Applied Sciences, vol. 10, no. 1, pp. 200-217.

Growth from Knowledge, 2020, Germans’ per capita purchasing power amounts to €23,766 in 2020, GfK, viewed 20 October 2020, https://www.gfk.com/press/germans-per-capita-purchasing-power-amounts-to-eur23766-in-2020

Heinrich T. 2018, national security reviews 2018: Germany, White Case, viewed 20 October 2020, https://www.whitecase.com/publications/insight/national-security-reviews-2018-germany

Heritage, 2020, 2020 index of economic freedom, viewed 20 October 2020, https://www.heritage.org/index/country/germany

Koptyug E., 2020, Automobile industry in Germany-Statistics and facts, Statistica, viewed 20 October 2020, https://www.statista.com/topics/3202/automobile-industry-in-germany/

Rauwald and Hull 2019, Why tesla chose Germany for its new plant, Automotive News, viewed 20 October 2020 https://www.autonews.com/manufacturing/why-tesla-chose-germany-its-new-plant

Reinhold, M. and Thomsen, S., 2017, ‘The changing situation of labour market entrants in Germany,’ Journal for Labour Market Research, vol. 50, no. 1, pp. 161-174.

The World Bank, 2020, Germany: Stock market capitalization, in dollars, The Global Economy, viewed 20 October 2020, https://www.theglobaleconomy.com/Germany/stock_market_capitalization_dollars/

Transparency International, 2020, Transparency International Germany, viewed 20 October 2020, https://www.transparency.org/en/countries/germany#

Trumbull, G., 2018. Consumer capitalism: politics, product markets, and firm strategy in France and Germany. Cornell University Press.