Fourth paragraph, March 22 story: Corrects the timing of FSD Beta’s launch in Europe next year.

Victoria Waldersee, Nadine Schimroszik

GRUENHEIDE (Reuters) – Elon Musk received cheers as he handed over Tesla’s first German-made vehicles at the Gruenheide plant. This marked the beginning of America’s European hub, just two years since it was announced.

The 30 customers and their families were treated to loud music as they saw their new shiny vehicles in a Tesla-branded tunnel. They cheered as Musk danced and joked while the crowd cheered.

Musk described it as “another step towards a sustainable future” and said that “this is a wonderful day for the factory”.

Musk indicated that Tesla would likely release a European test version its “Full Self-Driving Software” in the next year depending on regulatory approval.

He told workers at the factory that it was difficult for them to complete self-driving across Europe.

German Chancellor Olaf Scholz attended the event and praised the gigafactory for its potential future. However, the factory has been met with opposition. Environmental activists blocked entry while holding banners protesting the high use of water.

Two protestors jumped from the motorway sign at the factory and blocked traffic for several hours.

Musk had originally hoped that the factory would start producing eight months ago. But licensing delays, local concerns over the impact of the plant on the environment and other obstacles impeded Musk’s ability to get the job done.

Tesla had to dispatch European orders to Shanghai as it waited to get its German license. It did so to increase logistics costs, which was a problem at a time Tesla was experiencing shortages of chips and other disruptions to supply chains.

On March 4, the local authorities gave their final approval for production to start in Germany. However, it had to meet certain conditions such as water usage and air pollution control.

Musk was also urged by the U.S. top securities regulator to ensure that a federal judge does not let him back out of an agreement that requires his Twitter use (NYSE:) be monitored.

Tesla shares rose 7.9% to their highest point in over two months Tuesday.

RACE WITH VW

Tesla announced that they have received the Model Y Performance, a car with a cost of 63990 euros (or $75,000), which has a range from 514 km to 320 miles. They also stated that any new orders can be made at the plant beginning in April.

Tesla claimed that 3,500 out of the expected 12,000 employees have been employed so far.

The plant can produce 500k cars per year at full capacity. This is more than the 450,000 electric vehicles sold by Volkswagen (DE:), a German competitor.

In the end, it will produce 50 gigawatt hours of power (GWh), surpassing any other plant in Germany. Tesla will import Chinese batteries for the Model Ys, which are made in Germany. This is before local production can begin.

Musk spoke Tuesday about how battery production would pose a challenge next year. He also said that it will “limit” Tesla’s future plans to increase vehicle production.

Volkswagen has a 25% share of the European fleet electrification market, compared to Tesla’s 13%. Musk stated that ramping up production will take more time than it took to construct the plant.

JPMorgan (NYSE) had predicted Gruenheide would make around 54,000 cars in 2022. That number will increase to 280,000 by 2023 and 500k in 2025.

Volkswagen received 95,000 orders for electric vehicles in Europe last year. The company is currently building a brand new 2Billion euro factory and six batteries plants in Europe.

However, Tesla’s timeline is slower than Tesla’s. The EV factory will open in 2026 while the first battery plant opens in 2023.

($1 = 0.9086 euros)