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The dispute over Tesla's Gigafactory

by Gunter Hayn Tuesday, Aug. 02, 2022 at 8:44 PM

Theodor Fontane at the end of the book: "All reformatory power nowadays rests with the purse, ideas count for little, law counts for nothing. Tesla's Gigafactory will probably prove to be both a curse and a blessing in perspective.

The dispute over Tesla's Gigafactory

By Günter Hayn

On November 12, 2019, Elon Musk - the man is the incarnate reincarnation of the American dishwasher's dream ... - announced the dawn of golden times for Brandenburg, or more precisely for East Brandenburg, at the Axel Springer building in Berlin. There was talk of a billion euro investment for a European Tesla production site and 12,000 new jobs. On Zeit-Online, Minister President Dietmar Woidke (SPD) raved: "For the first time, we are succeeding here in Brandenburg in showing that climate protection and the creation of wealth and jobs can go hand in hand."

At the time, not a single shovel of sand had been moved, let alone had the approval process even begun. Prae festum, in his Silicon Valley frenzy, Woidke had completely forgotten the bankruptcies with the Frankfurt chip factory and the Lusatian Cargolifter. While Musk was still looking for a location - the quiet Grünheide between Erkner and Fürstenwalde was only one of three options - the Minister President assured him of the unconditional support of the state government on August 28, 2019. The Welt am Sonntag quotes the letter in March 2020: "We will therefore support you with all appropriate possibilities in securing your temporal goals. [...] For all in connection with your planned investment required questions of approval [...] I assure you a prompt and quick processing." Translated into generally understandable German: Go ahead, we've got your back. A free ride.

Woidke's Minister of Economics, Jörg Steinbach (SPD) - who initiated the Tesla deal - spoke of "winning the lottery without having to bet. On the ranking list of the "bosses' comrades," the two Potsdam politicians are likely to occupy a leading position.

However, disillusionment and fear quickly mingled with the euphoria. Tesla's annual water consumption is said to be around 1.4 million cubic meters per year. In arid Brandenburg, Grünheide is located in a particularly drought-stricken area. The Strausberg-Erkner Water Association is responsible for supplying the Gigafactory. And even before Tesla was supplied with a single liter of construction water, it was under criticism. For example, because of the dramatic drop in the water level of Lake Strausberg. Like many others in the area, the lake is mainly fed by groundwater. The water board has significantly increased its withdrawals in recent years. Steinbach's image of "winning the lottery" is certainly correct. But who is the winner?

Two recently published books address this question. Longtime rbb journalist Wolfgang Bauernfeind presented his research findings under the title "Tesla's Gigafactory. Curse or Blessing?" Last year, business experts Wolf D. Hartmann and Walter Stock published the volume "Der Tesla-Coup. Brandenburg and the struggle for the Gigafactory in Grünheide". It is worth reading both books in parallel. They complement each other in an uncoordinated way. When read together, the result is not only a Brandenburg economic thriller, but also a glimpse of the probable beginning of a very fundamental transformation of the German economy and the politics that accompany it.

Bauernfeind takes us on a research trip that lasts from June 2020 to the fall of 2021. We meet Tesla fans and admirers of Elon Musk. We meet critics of the Gigafactory and committed environmentalists. We accompany the author during his talks with the mayor of Grünheide, Arne Christiani, and the Brandenburg Minister of Economics, Jörg Steinbach, as well as his counterpart responsible for environmental issues, Axel Vogel. Bauernfeind's course of talks is rounded off by a meeting with Tesla manager Harald Schlarb, which obviously surprised the author as well. The group's top management usually shuns publicity. Musk completely dispenses with a PR department. He tweets. For the Grünheide project, these tasks were de facto taken over by the Brandenburg authorities.

A not insignificant role in this was played by the discussion procedure of the objections of citizens and various associations against the Tesla settlement between September 23 and October 2, 2020. Instead of the three discussion days planned by the state environmental agency, there were eight. There were 885 objections from 414 objectors. The town hall in Erkner had to be rented. Bauernfeind was present on all eight days. However, no journalists were allowed in the hall. They had to follow the events in a press tent via transmission. Even when the number of participating objectors was considerably reduced, the media were kept at a distance. Incidentally, the petty harassment also included the ban on bringing water bottles into the hall. On the podium tables of the authorities and enterprise representatives such stood naturally. In sum, Bauernfeind's report makes it clear that the discussion process had little impact on the decision-making of the state environmental agency. Hartmann and Stock also speak cautiously of a "limited effect" of public participation: "Grünheide has been treated by those responsible entirely in the investor's interests [...]". Minister President Woidke has kept his word.

In the meantime, Tesla created facts. Always on the edge of black building, as Bauernfeind describes, but never illegal. The procedure was covered by federal legislation. The Federal Immission Control Act (BImSchG) provides the crucial loophole. Its § 8a allows the licensing authority to permit "on a provisional basis upon application" that "construction, including the measures required to test the operational reliability of the plant, may already begin before a license is issued." This possibility was used at least nineteen times before the final construction and operation permit was issued, as the authors of both books meticulously describe. Wolfgang Bauernfeind, as an experienced journalist, abstains from a personal evaluation. But he quotes the executive director of the Green League Brandenburg e. V., Michael Ganschow: "We are currently experiencing [...] the decline of democratic Federal Republic structures around us." The Tesla project is not the big bang on this issue. But with the Gigafactory, a prestigious model case has been launched.

The consequences could threaten the very existence of the region. I have already referred to the water issue as a cardinal question. On April 17, 2022, the Berliner Zeitung quoted a dpa report that had it all. In the Strausberg-Erkner region, "because of environmental problems," only just under 15 instead of the planned 17 million cubic meters of drinking water per year could be used. Tesla consumes a good 10 percent of this. In the meantime, the water board has announced the first rationing steps. Wolf D. Hartmann and Walter Stock explain the problems of environmental pollution and regional planning deficits in detail.

But they also go into the economic background of the project in greater depth than Bauernfeind is able to. They, too, see potential for the future in Elon Musk's technological visions, which the German automotive industry has so far criminally overlooked. But they also see the dangers of a corporate strategy that comes across as so rabid. "Tesla is still in the fast lane," they note. Financially, everything is on shaky ground. Tesla earns ,000 per vehicle at 50 percent capacity utilization at its sites worldwide, while Mercedes-Benz's profit margin is ,000. Tesla's most recent annual report, however, notes much higher figures. For Grünheide, the decisive factor will be how the group succeeds in "maintaining or expanding the corresponding growth margins and market shares," argue Hartmann and Stock. Otherwise, a flop cannot be ruled out here either.

Even the most creative state government in terms of economic policy cannot eliminate the basic rules of the market economy. In the good Brandenburg tradition, the authors naturally quote Thedor Fontane at the end of their book: "All reformatory power nowadays rests with the purse, ideas count for little, law counts for nothing. Tesla's Gigafactory will probably prove to be both a curse and a blessing in perspective. This would also answer Wolfgang Bauernfeind's initial question.

Wolfgang Bauernfeind: Tesla's Gigafactory. Curse or Blessing? Mitteldeutscher Verlag, Halle (Saale) 2022, 288 pages, 20.00 euros.

Wolf D. Hartmann / Walter Stock: The Tesla Coup. Brandenburg and the struggle for the Gigafactory in Grünheide, Verlag für Regional- und Zeitgeschichte, Berlin, 2021, 176 pages, 12.80 euros.

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