In a significant strategic move for Tesla, the company announced on February 26, 2025, that it has acquired the Reutlingen facility and associated assets from German firm Manz, amidst a challenging landscape in the European electric vehicle (EV) marketThis acquisition comes on the heels of an especially tough January for the EV sector, which has been described as "Black January". Details regarding the financial aspects of the deal have not been disclosed, but it is viewed as a pivotal step in bolstering Tesla's response to the impending crisis within the European marketKey to this acquisition is Manz's reputation as a prominent supplier of battery production equipmentThe company, however, has faced dire straits, grappling with intense competition resulting from an oversupply of battery capacity across EuropeTheir financial reports indicated a staggering 72% year-on-year decrease in battery equipment orders.

Tesla’s acquisition not only provides access to high-end production equipment valued at approximately €320 million but also allows the company to integrate a skilled workforce of over 300 engineers, including 85 seasoned experts with over a decade of experience in solid-state battery technology

Advertisements

According to the factory manager in Berlin, the acquisition is expected to increase production capacity by 15% within three monthsThis maneuver is particularly aimed at addressing Tesla's current bottleneck in production capacityThe Berlin factory was designed for an annual output of 500,000 vehicles; however, it managed to produce only 380,000 in 2024, primarily due to issues surrounding the efficiency of the battery module production line.

Despite these efforts, Tesla's overall waning presence in the European market is difficult to overshadowRecent figures from the European Automobile Manufacturers Association reveal that Tesla’s registration numbers in January across 27 countries in Europe plummeted to 9,900 vehicles, reflecting a sharp 45.3% decline from the 18,100 registrations recorded during the same month last yearAlarmingly, this number fell short of the sales of Volkswagen's ID.3 single model in GermanyA deeper look into specific markets reveals a uniformly declining trend: in France, Model Y sales dropped from 2,800 units to 1,000, a staggering decrease of 64.3%; in Norway, registrations fell from 3,200 to 2,000 units, representing a 37.5% decline; the UK market has seen a consecutive three-month decline with an 8% year-over-year drop in January; and in Germany, Tesla's sales sank by 59.5%, with Volkswagen's ID.7 surpassing Model 3 in market shareInventory data is also troubling, as Tesla's channel stock in Europe has reached 21,000 vehicles, three times the normal levelAverage inventory cycles for the Model Y have extended from 12 days in 2024 to 38 days currently.

Industry analysts attribute Tesla's woes in Europe to several converging factors

Advertisements

Notably, Elon Musk's controversial remarks regarding the upcoming EU parliamentary elections have had a negative impact on the brand's imageRecent polls from Ipsos indicate a 17-point drop in brand favorability, particularly striking in left-leaning countries like France and SpainMoreover, issues relating to product cycle transitions have exacerbated the crisisWith the new Model Y set for a summer release, many consumers have been hesitant to make purchases, delaying decisions for up to six monthsData from JATO Dynamics shows that by the fourth quarter of 2024, 63% of potential customers who were considering postponing their Tesla purchase expressed they were waiting for the new model—a figure that has doubled compared to the same period in 2023. Additionally, aggressive moves from local manufacturers have heightened competitive pressuresVolkswagen's "Electric Offensive 2025" plan has seen the ID. series models priced as low as €28,000, directly competing with the Model 3; meanwhile, Renault has launched a long-range version of the Megane E-Tech, which boasts improved range of 550 kilometers, priced 12% lower than a similarly equipped Model Y.

In response to these mounting challenges, Tesla is implementing various strategies to navigate this turbulent landscapeAlongside the acquisition of Manz, the company has secured a long-term supply agreement with German chemical giant BASF for lithium hydroxide to ensure better control over crucial raw materialsTesla is also accelerating its local production capacity, with an expansion of the Berlin factory's Phase II set to commence operation in the third quarter, boosting battery production capacity by 40%. Furthermore, the firm has rolled out a "European Loyalty Program," which provides existing customers with an €8,000 subsidy for vehicle trade-insIn France, they are also offering collaborative subsidy schemes involving both government and enterprise funding

Advertisements

Advertisements

Advertisements