Despite general weakness in the market, shares of Tesla (NASDAQ:TSLA) are outperforming both the S&P 500 and Nasdaq 100 today. However, the leading electric vehicle (EV) maker has still lost more than 25% of its market capitalization since the start of the year. On the bright side, Tesla announced this morning that it had received conditional approval to commence commercial production for its Brandenburg, Germany, gigafactory.
TSLA Stock: Tesla Receives Conditional Gigafactory Approval
Following months of delays, Brandenburg’s state environment office finally gave Tesla a conditional license to begin commercial production. At full capacity, the gigafactory is projected to produce up to 500,000 EVs per year. Additionally, Tesla has already hired 3,000 workers to work at the gigafactory.
However, investors should note that the license is conditional. What this means is that Tesla must first wait for a “public objection period” and pass other inspection policies before starting production. These inspection policies include checking for air pollution control and water usage. Including the objection period and inspection policies, Tesla must satisfy about 400 conditions before starting production. The EV maker has stated that it plans to satisfy these conditions within two weeks.
Tesla’s two-week timeline to satisfy conditions may not come to fruition. This is because the public objection period will remain open for two weeks. Afterward, Brandenburg will accept public comments for one month. However, it does seem like Tesla is in the final stretch of beginning production in Brandenburg.
Local Environmental Groups Opposes Tesla Gigafactory
One other potential roadblock in Tesla’s plan comes from local environmental groups and residents who disapprove of the new factory. As one local resident explained, “The local populace here has been told for years to reduce its water use. Then the richest man in the world comes along and gets everything laid out at his feet. … There’s something wrong with the system.”
In opposition of the gigafactory, two local Brandenburg environmental groups will engage in an administrative court hearing today. The purpose of the hearing is to discuss the gigafactory’s water usage. The groups claim that the Brandenburg environmental ministry did not conduct sufficient reviews before approving Tesla for a water utility license. Furthermore, the group claims that the gigafactory will use 1.4 million cubic meters of water annually, which will reduce the supply of drinking water to surrounding regions. That amount is enough to supply a 30,000-person town for a year.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
