Tesla move will draw further companies into Germany: state premier

FRANKFURT (Reuters) - Tesla announced earlier this month that it will build its first European factory near Berlin will draw further companies from the electric mobility and energy storage sectors into Germany, a state premier told newspaper Die Welt. “They are already on their way. I’m hearing there are further inquiries with the communities and the regional business development program. Tesla will cause other companies to follow,” said Dietmar Woidke, premier of the eastern German state of Brandenburg that surrounds Berlin. He said Brandenburg was already in talks with other companies, declining to identify them due to confidentiality agreements. “I expect that we can announce it before Christmas,” Woidke said. Tesla’s move is a big boost for Germany as a center for manufacturing after BMW and Daimler in recent years chose to build new factories in Hungary, and after its auto industry was hit hard by Volkswagen’s admission in 2015 that it cheated US diesel emissions tests. A quarterly loss was deeper than expected, and despite record deliveries in the quarter, revenue came in lighter than analysts’ expectations. Moreover, margins – a focus of investors – narrowed in the quarter, adding to Tesla’s challenges in delivering profit going forward. Shares fell 11.5% after hours and extended losses after the announcement about Straubel, a founding engineer who will become a senior adviser. Under pressure to meet his repeated promises to make Tesla sustainably profitable, Chief Executive Elon Musk is trying to contain costs while still spending on major initiatives from a Shanghai factory and assembly-line to upcoming models such as the Model Y SUV and a Semi commercial truck. Tesla initially promised to be profitable in the third quarter of 2018 and has now pushed back that target multiple times. Now profit is expected in the fourth quarter of 2019, with the current quarter to be break-even, Musk said.