Tesla European Factory
It's not well-known, but Tesla has had a "final assembly" factory in Europe for a long time.
The factory is located in Tilburg in the Netherlands and the automaker expanded the factory to a new 78,000 square-meter (840,000 sq-ft) facility back in 2015.
Tesla's Tilburg factory performs the final assembly process and testing for Model S and Model X vehicles going to certain European markets, including the Netherlands, Belgium, France and Germany. The plant has an indoor test-track for quality testing before the cars go out to new owners.
But Tesla has also been talking about deploying more significant manufacturing capacity in Europe to be able to build cars from scratch in the market.
Tesla European Gigafactory
CEO Elon Musk has been talking about a full battery and vehicle factory in Europe for a while now.
Several European countries have even launched campaigns to try to attract Tesla in their home market.
Tesla was supposed to confirm a location for a factory in 2017, but it never happened.
Last year, Musk said that Germany is the "leading choice" for a factory in Europe and he even specified that "the German-French border makes sense" for a factory near the Benelux countries.
Now Tesla says that it is "accelerating" its effort to bring a Gigafactory to Europe.
The automaker wrote in its latest shareholder's letter this week:
"We are also accelerating our European Gigafactory efforts and are hoping to finalize a location choice in the coming quarters."
In a conference call following the release of the letter, Musk added:
"We also have to finalize a location for our European Gigafactory before the end of the year."
The CEO also said that he expects construction will be "well underway" within the next 12 to 18 months and have the European Gigafactory operational by the end of 2021.
Hopefully, third time is the charm because Tesla has talked about being close to announcing a Gigafactory in Europe on two other separate occasions before.
But I think it makes more sense now.
Tesla has $5 billion in the bank and that's more cash on hand than they ever had. Several European countries are hitching to have battery and EV factories in their market and Tesla is likely to get incentive packages on the table.
With the cash on hand, a good incentive package, and Tesla's improvements in capital efficiency to deploy manufacturing capability, it could be the perfect time to start work on a European factory and have it operational just in time for the launch of Model Y in Europe.
What do you think? Let us know in the comment section below.