Why Berlin?

Liu Xiaolin/Wen "I don't understand, why do you have to go to Berlin?" Berlin is not a modern city! At the end of 2021, after Weilai announced the decision to make Berlin, Germany, the next stop in Europe, a German car company executive in China could not help but "spit" when talking to the author about this topic.

What does "all" mean? Not only Weilai, the "shark" Tesla in the global electric vehicle field also announced plans to build Tesla's European Gigafactory in Berlin as early as the end of 2019. Two of the most influential electric vehicle manufacturers in China and the United States have taken a fancy to Berlin.

On March 20, 2022, Tesla's first factory in Europe, Giga Berlin, Berlin, Germany, announced the opening of the opening, Tesla CEO Musk danced a familiar dance at the opening ceremony, CNBC (American Consumer News and Business Channel) specifically mentioned: This dance was skipped two years ago when Tesla's China Giga Factory opened.

In the next two days, Chinese and foreign media described the particularity of the factory as the German auto industry ushering in the "catfish" and Tesla cutting into the "hinterland" of volkswagen. In addition to the 30 vehicles delivered to users at the opening ceremony site, five Model Y Performance cars appeared at a Tesla delivery center in Denmark a week after the opening, which means that Tesla has begun delivering new cars to other European countries hundreds of miles away, the latest report said.

The above-mentioned German car companies in China are always paying attention to the new car manufacturers and have test-driven all the competitors in the new car brands. His disundertion lies in the fact that, in his eyes, Berlin is not a pioneering city that embraces new things and can highlight the concept of smart electric vehicles. This is by no means his own opinion, and will this idea be quickly defeated by reality?

Why can't it be Berlin?

"In fact, many people don't know that although the factories of car companies like Volkswagen are in Wolfsburg and other places, many of the executives and technicians of their companies live in Berlin." Regarding the connection between Berlin and automobile manufacturing, Zhang Junyi, deputy general manager and COO of Ping An Smart Enterprise, reminded that Berlin has its own advantages in engineering manufacturing, science and technology innovation capabilities and talent reserves. Not to mention, after Brexit, Berlin, as the capital of Germany, has a political and economic radiation and investment demonstration effect in the whole eu, which is no longer comparable to other cities.

In the inherent perception, Berlin's vitality index is indeed inferior to that of cities such as Munich and Frankfurt. As the largest economy in Europe, there are many different economic centers in Germany, but in the core manufacturing industry, almost all the important cities on the German map have been covered or radiated by powerful German car companies: BMW's headquarters is the third largest city in Germany, the largest city in the south, Munich, the superiority of the fashion and economic and cultural center is irreplaceable, and it has been in Hamburg, germany's second largest city, as a key promotion base for its electric vehicles. Ingolstadt, 60 km from Munich, is Audi's home base. Stuttgart, near the Black Forest in the southwest, occupies another luxury car manufacturer, Mercedes-Benz, surrounded by many international companies such as Daimler, Porsche and Bosch, radiating and linking Frankfurt, 204 kilometers to the north, and Munich 220 kilometers to the southeast. The label in northern Germany is the world-famous Volkswagen city of Wolfsburg. Their production sites are located in several cities in East and West Germany, including Leipzig.

Some people refer to the top three cities in Germany – Berlin, Hamburg, and Munich – as the German version of "Beishangguang (beiguangshang to be precise)". According to normal logic, these are naturally the three cities that foreign enterprises first consider investing in. However, among them, Munich is BMW's headquarters base, which is not suitable for foreign car companies to consider. Hamburg is worth mentioning, the most livable and affluent place in Germany and Europe, with the second largest container port and Airbus manufacturing base in Europe, and an active advocate of the "no-burn" and electric vehicle programs. According to German media reports, Hamburg ranks first among the German federal states with about 4% of electric vehicle usage. By January 2021, the number of electric or hybrid vehicles in hamburg has increased by 64% in one year. Hamburg is also the second city after Berlin to use a Volkswagen ID. electric car as a shared transportation car. However, the consumption inertia cultivated by BMW, Volkswagen and other German brand electric vehicles in Hamburg for many years has set up obstacles for the promotion of other electric vehicle brands.

As for Berlin, many of the internet entries are introduced: the capital and largest city of Germany, located in the northeast of Germany, is the political, economic and cultural center of Germany. More of the remaining labels focus on their lamentable historical circumstances and the sense of political symbols. In the German economic structure, especially the automobile economy, Berlin's presence is not strong. Information from 2015 showed that Berlin even awkwardly pulled down Germany's per capita economic output, becoming europe's weakest capital. As a result, many people's views of Berlin are divided.

But that doesn't stop Berlin from becoming the most attractive city for investors. With the increase in immigration and support for tech start-ups in the fields of information and communication technology, media and the creative economy, Berlin has become one of the first-tier global science and technology hubs over the past decade, becoming the world's most popular gathering place for science and technology capital and start-ups.

In 2015, Berlin startups raised €2.1 billion, more than London, and the number of start-ups grew more than twice in three years. In the past five years, American technology companies and makers, including Google, have also invested in Berlin, and the "European Silicon Valley" has begun to take shape. In 2018, while expressing concern about Berlin's 50% rise in house prices in five years, it also believed that this was a sign of the good economic trend. In 2019, Berlin's GDP per capita exceeded the German average gdp for the first time.

More importantly, Berlin itself is also representative of Germany's strong manufacturing base and engineer culture. Similar to germany's overall economic route, Berlin's technological innovation projects are also mostly centered on manufacturing, and automobiles are one of the important sectors. In 2020, under the huge pressure of emission reduction and environmental protection and the label of "Europe's largest polluter", the automotive empire Germany began to implement high subsidies for electric vehicles. This gives Berlin's "capital economy" better support in attracting investment in electric vehicles.

The story of the unusual Musk and his Tesla settling in Berlin is full of twists and turns in the online version, and Musk's dissatisfaction with the slow efficiency of the German authorities and the repeated obstruction of the construction of the factory become the climax of the story.

But in fact, in the first half of the story, what gave Musk Berlin "ambition" was the warm invitation of the Berlin authorities, and although the resistance from the local people such as logging, bats, water sources, and the environment was delayed by nearly 9 months, the factory that was originally scheduled to be completed and put into operation in July 2021 was delayed by nearly 9 months. But according to local Germans, this is already a green light and unprecedented efficiency compared to the tradition of lengthy todess-style processes.

Musk announced in November 2019 that he would invest €5 billion to build the first European factory in Greenhead, Brandenburg, just outside Berlin, and Tesla's fourth gigafactory after Nevada, New York and Shanghai. In January 2020, musk just after the official delivery of the domestic Model3 at the Shanghai Gigafactory, Tesla signed a land contract with brandenburg and set a schedule for the construction of the Berlin Gigafactory in 18 months.

In public reports, Brandenburg Governor Dietmar Voydeck said the local government had "spent a long time lobbying" to facilitate Tesla's settlement, and That Berlin provided dedicated financial support for the production of battery packs for electric vehicles.

Berlin's new airport, adjacent to Tesla's gigafactory, was delayed six times and took 14 years to complete by the end of 2020. In contrast, Tesla's Berlin factory took 28 months from the signing of the contract to the completion of the project, which is already an exception. Musk's dissatisfaction is largely due to the record of Tesla's China Gigafactory being built in 10 months as a comparison.

From the perspective of Germany and Berlin, the lobbying for Tesla does not rule out the same expectations as the introduction of Tesla in Shanghai, which has the same expectation of producing a "catfish effect". In Germany, concerns about the future direction of the German automotive industry and whether it can continue to maintain competitiveness began to breed a few years ago, and volkswagen and Opal's speed towards electrification and intelligent transformation is still far from expectations in matching EU emission reduction standards and increasing market interest.

German Chancellor Scholz also made it clear at the opening of Tesla's Berlin plant that the entire region of eastern Germany will benefit from the new Tesla Supercar factory. He also said that electric vehicles will profoundly affect the future of mobility, and Germany needs global competition, not de-globalization.

Germany's determination to "globalize" is a result of pressure at home, but a huge opportunity externally. On January 1 this year, the European Union launched the implementation of the most stringent carbon emission standards for motor vehicles in history. Germany, a major automobile producer, immediately announced the implementation of a new subsidy policy for new energy vehicles, and the amount of subsidies has not only increased by 50%, but also some owners who buy second-hand electric vehicles can also receive subsidies. Specifically, a pure electric vehicle with a price of less than 40,000 euros will receive an increase in the amount of subsidies from 4,000 euros to 6,000 euros.

Generous subsidies are the biggest attraction, and this works anywhere in the world. This is how Norway became the first stop for many electric vehicles to land in Europe.

Electric vehicles have changed the landscape of the global automotive industry, and this is getting a clear footnote in Berlin's "openness". In the strict sense, Musk's dance in Berlin and Shanghai's dance steps are the same, but the meaning is different. Shanghai's dance is excited to break into the world's largest new energy vehicle market, and under Shanghai's low-cost rental land and tax-free welcome policy, Musk sees a "super printing machine" future.

Landing in Berlin is a symbol of status, musk is excited to get the affirmation from the core area of the European automotive industry, which can be described as fame and fortune. More importantly, in the face of subtle geo-economic changes and frequent global instability, entering Europe in the form of Tesla's investment in a new factory may potentially open several doors for musk and his industrial empire, which may be far beyond the imagination of the outside world.

The temptation of the spire

Of course, from the perspective of Tesla and Weilai, which have already built cars in Berlin and are about to sell cars in Berlin, Berlin's biggest advantage is still Germany's cutting-edge automotive engineering technology and high-tech industry chain resources behind it. Admiring Germany's outstanding engineering skills, Musk also intends to establish an engineering and design center in Berlin.

As a representative of China's new car companies, Weilai did not avoid BMW headquarters in Munich, and set up an automotive design center in Munich, Germany at the beginning of its business, this model is a bit like many car companies taking Beijing as their headquarters and establishing a research and development center responsible for styling design in Shanghai. However, NIO's current plans for Berlin are limited to establishing direct stores in the local area, carrying out sales and after-sales services, similar to the Norwegian model. Weilai should pay more attention to the economic effect of Berlin's capital and the market space that can be opened as the hinterland of the global automotive industry.

The spire is seductive, but not easy to stand, and the 536-page conditional building permit Tesla obtained is both a start key and can become a pause key at any time. It is reported that due to the urgent local water reserves and insufficient groundwater extraction, it is difficult for the Tesla factory to have further development plans, and if it continues to expand production, it will require additional mining licenses. According to the German side, once the normal water use of the local area is endangered, Tesla has the possibility of stopping production.

For Weilai, whether a Chinese brand that is less influential than Tesla but is also famous in the global electric vehicle field can be recognized by German consumers is the biggest challenge. For which car will become the favorite model of German users, the top management of the German car company mentioned at the beginning said that it is difficult to say, it is difficult to judge these new brands, new intelligent electric vehicles, new experiences, which will make the German people more acceptable. But he himself feels that during the test drive, he was deeply impressed by China's new car brands.

The consumption inertia of local brands in Germany may be the biggest risk faced by WEILai. At present, the structure of the top ten brands in German domestic automobile sales is extremely stable, and only three non-German brands, Ford, Renault and Hyundai, have entered. The top four are fixed for volkswagen and Opalben three major German brands, Volkswagen's sub-brands Skoda and SIT, and Opel (although sold to PSA, it has been founded in Germany and has been producing, in essence has become a German brand) fluctuates between 5-10. The only difference between 2021 and 2020 is that Ford fell from fifth to seventh, and Opel rose to fifth.

In terms of electric vehicles, the top five sales in Germany in 2020 are Renault ZOLE, Volkswagen Electric Golf, Tesla Model 3, Volkswagen ID.3, and Hyundai Kona EV. After the Volkswagen ID. accelerates product launch and delivery in 2021, the ranking of electric vehicle sales in the first half of 2021 will immediately become: Volkswagen UP, Tesla Model 3, Volkswagen ID.3, Hyundai e-Kona, Renault zoe. It can be seen that the German people instinctively rely on Ashkenazi brands.

In 2021, 307,500 electric vehicles were sold in Germany, up 58.4% from 194,200 units in 2020, accounting for 11.7% of the entire automotive market (2.62 million units). Supported by domestic sales in Germany, Volkswagen ID. announced that it has become the most popular electric vehicle in continental Europe.

Domestically, NIO quickly has a large number of fans with service and spiritual labels, does this model still work in Germany? In addition to Weilai, other Chinese electric car brands also see Germany as the final landing place, can they arouse the enthusiasm of Berliners for the "new generation of cars"? The executives of the above-mentioned companies in China said that their competitor analysis department had analyzed almost all of China's new car brands with prices benchmarked, but he said it was difficult to say which car would be popular after exporting to Europe.

In the process of introducing "global competition" into the German economy, Berlin's warm invitation to electric vehicle companies to settle in is tantamount to injecting a shot in the arm for the transformation of electric vehicles, especially in the context of the current new crown epidemic is still spreading around the world, the Russian-Ukrainian conflict has brought many instabilities to international trade and regional security, and after multiple rounds of impacts in the global automotive supply chain, resource restructuring and changes in car-making ideas have become an inevitable trend.

As for volkswagen and Opalben, the sense of threat of "wolf coming" is already full of bows. In the eyes of netizens, Musk is dancing on the turf of a number of veteran German car companies, and this sense of achievement is indeed impossible to bring in Shanghai, but the peer psychological hint of "you see I am not pleasing to the eye, but I can't take it" is the same. Will Tesla's transition from "catfish" to "shark" in China be staged in Germany? This will be a highlight of the second half of the story.