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Elon Musk Opens New Tesla Factory as the Company Struggles to Keep Up With Demand

Covid-19 continues to pose production challenges for Tesla.

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Some good news came today for those waiting on Tesla to fulfill their Model Y and Model 3 orders: Elon Musk will officially open his electric-vehicle maker's first factory in Europe on Tuesday, per a tweet from the CEO, lessening the burden on the company's existing facilities in the U.S. and China.

Musk will do the honors at a ribbon-cutting ceremony at the new Giga Berlin (or Gigafactory Berlin-Brandenburg) facility in Grünheide, a coal town in Brandenburg, Germany, CNBC reports. Tesla expects the Berlin factory to make as many as 500,000 vehicles each year — a much-needed production increase as the company fights to keep up with demand across the globe.

Related: Elon Musk Says Tesla, Unlike Apple, Won't 'Bludgeon Competitors'

On March 4, German authorities gave conditional production approval after months of delays.

Musk has been eyeing a Berlin factory for years, a significant step forward in Tesla's planned-for global expansion, which officially began with the opening of its Shanghai-based Gigafactory 3 facility in 2019. Since then, Musk has also opened a plant in Austin, Texas.

Covid-19 continues to pose production challenges for Tesla. Just last week, an outbreak of cases in China resulted in a temporary shutdown of Tesla's Shanghai factory — affecting Model Y and Model 3 output for at least a couple of days. Recently, the company has been fulfilling European orders with cars made in China, so on-continent production will be extremely beneficial.

Related: Elon Musk's Tantrums Are Detailed in New Tesla Book

As the Berlin factory considers ramping up production even further, however, its water usage might be a problem. In a research note on Monday, Deutsche Bank autos sector analysts said it could impact the future of the plant, as "Sources indicated that the company may completely exhaust the water reserve in the region with the first stage of the plant build out, and will need additional extraction permits in order to expand its capacity any further in the future."

Tesla Inc was up 1.72% as of 10:18 a.m. EST.

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