The European market demand is rebounding strongly, Tesla, Inc. (TSLA.US) is expanding production at its German factory against the trend: the annual production target has been raised by about 20%.

Tesla, Inc.'s German manufacturing subsidiary released its annual financial report for 2025, confirming that the American electric car giant plans to increase the weekly production capacity of the Gruenheide factory to 7,500 vehicles in the 2026 fiscal year, equivalent to an annual output of approximately 375,000 vehicles, representing a growth of about 20%. At the same time, they plan to expand their battery business and create 3,500 new jobs. This expansion plan stands in stark contrast to the wave of layoffs occurring in the German automotive industry, with traditional car giants such as Volkswagen, Mercedes-Benz, and BMW shutting down factories and laying off workers. From 54% to full capacity: The need to increase production efficiency The Gruenheide factory is Tesla, Inc.'s only complete vehicle production base in Europe, starting production in March 2022, currently producing only the Model Y. In 2025, the factory produced a total of 202,000 vehicles, a decrease of about 9,000 vehicles compared to the previous year, with a production efficiency rate dropping from 56% to 54%. Tesla, Inc. attributed the production decrease to model adjustments and the integration of new redesigned models. Despite the drop in production, Tesla, Inc.'s German subsidiary achieved a net profit of 77.1 million euros (approximately 88.2 million dollars) in 2025, an increase of about 20 million euros compared to 2024. However, revenue decreased from 7.7 billion euros in 2024 to 7.1 billion euros. This "reduce output and increase profit" phenomenon shows that even with a production efficiency rate of less than 60%, Tesla, Inc. can still extract more profit from each vehicle. The expansion plan for 2026 is a direct response to this situation. The company expects production to be "significantly higher" in 2026, with a simultaneous increase in production efficiency. With a target of 7,500 vehicles per week and an annual output of 375,000 vehicles, Tesla, Inc. is trying to push the production efficiency of the Gruenheide factory from 54% to almost full capacity. 3,500 new jobs: Hiring against the trend of layoffs in Germany Along with the expansion plan comes a massive recruitment campaign. Tesla, Inc. plans to add approximately 3,500 new jobs at the Gruenheide factory in the short to medium term. Specific additions include approximately 1,000 in the vehicle production department, 1,500 in the battery production department, and about 500 temporary workers transitioning to permanent employees. Currently, the total number of employees at the Gruenheide factory is approximately 12,500. In June of this year, Tesla, Inc. announced that they would increase production by 20% to 7,500 vehicles per week starting in October, hiring an additional 1,000 new employees. Of the previously announced first batch of 1,000 new hires, approximately 700 have already completed their onboarding. This recruitment scale is considered "unique" in the current German automotive industry. According to the analysis by the personnel service provider Index, the number of job vacancies in the German automotive industry has been at a low point in the first half of 2026, far below the peak in the first half of 2023. Volkswagen CEO threatened to lay off 50,000 more people globally; Mercedes-Benz CEO called for the abandonment of the 35-hour workweek; BMW's new CEO announced a tightening plan upon taking office; Opel cut 650 research and development positions. Audi's public recruitment site only has 101 positions posted, with only 5 being permanent job positions. How is Tesla, Inc. expanding against the trend? According to local media reports, Tesla, Inc. implements a 38-hour workweek at the Gruenheide factory, which is 3 hours longer than other German car factories, providing a cost advantage of 7.9% solely in this aspect. Additionally, Tesla, Inc. is the only manufacturer that has not signed a collective labor agreement with the largest German union, IG Metall. The geographical location of Gruenheide near the Polish border also allows Tesla, Inc. to access Polish workers with labor costs that are 58% lower. Battery ambitions: 18GWh capacity and the "first in Europe" complete industrial chain In addition to increasing vehicle production, battery production is another main focus of this expansion. Tesla, Inc. plans to increase the annual battery production capacity of the Gruenheide factory from the initial plan of 8GWh to 18GWh, adding an additional investment of 250 million dollars. The 18GWh capacity is enough to meet the battery demand for approximately 250,000 to 350,000 vehicles. Battery production is expected to start in the first half of 2027, creating approximately 1,500 new jobs. Tesla, Inc.'s goal is to achieve a complete integration of the entire industrial chain from battery cells to vehicle assembly at Gruenheide, a model that is said to be "the first of its kind in Europe." However, the company also acknowledges in the annual report that European battery production faces "significant challenges" and is closely linked to economic frameworks such as the supply chain. Compared to the Chinese and American markets, the European battery manufacturing industry faces multiple obstacles to development. Demand recovery: Model Y returns to the top of the German electric vehicle sales chart The confidence in expanding production comes from real market demand. After a soft 2025, Tesla, Inc. is experiencing a strong recovery in the European market. In March 2026, the registration of the Model Y in Germany quadrupled to 9,252 vehicles year-over-year. In the same month, Tesla, Inc.'s new car registrations in the German market grew by over 315% year-over-year. This momentum continued into the second quarter: Tesla, Inc. delivered 480,100 vehicles globally in the second quarter of 2026, a 25% increase year-over-year, surpassing market expectations by far. The data in June was also impressive. Tesla, Inc.'s new car registrations doubled in France (up 105%), grew by 56% in Sweden, and grew by 39% in Denmark. In the first half of this year, Tesla, Inc. registered nearly 29,000 vehicles in Germany with the Model Y and Model 3 alone, a 225% year-over-year increase. The Model Y has regained the top spot in the best-selling electric vehicle chart in Germany. However, the recovery is not uniform. UK market data for July showed that Tesla, Inc.'s new car sales decreased by nearly 60% to 987 vehicles year-over-year. In early July, there were reports that BMW temporarily surpassed Tesla, Inc. in monthly electric vehicle deliveries in Europe by 308 vehicles. The competitive landscape in the European market is still evolving. Strategic significance: the multiple values of localized production From a strategic perspective, the expansion of the Berlin factory is crucial for Tesla, Inc. The Gruenheide factory currently supplies more than 30 markets and will further expand in the future. Local production in Europe helps Tesla, Inc. reduce its reliance on exports from China and the United States, protecting European deliveries from logistical constraints and potential trade tensions. Additionally, localized production helps Tesla, Inc. maintain price competitivenessthanks to good cost control, Tesla, Inc. has significantly reduced starting prices in Germany. Tesla, Inc. clearly highlighted the risks in the annual report as well. The company stated that the implementation of the expansion plan could still be constrained by the macroeconomic environment, increased conflicts with the GEO Group Inc, and risks of supply chain disruptions that could affect business expectations. The "significant challenges" of European battery manufacturing and international competitive pressures are also variables that cannot be overlooked. Furthermore, earlier this year, Musk expressed his hope that the Berlin factory could also produce the Cybercab autonomous taxi and Optimus humanoid Siasun Robot & Automation in the future. This indicates that the long-term positioning of the Gruenheide factory may go beyond being just a car manufacturing base.