Electric car manufacturer, Tesla Motors is reportedly considering building a large battery factory in Germany.
According to comments by the German Economy Minister Sigmar Gabriel, the company is in talks with the German Government on locating its next Gigafactory within the country.
Speaking at a Mercedes Benz event in Rastatt, Gabriel remarked that he had been in contact with Tesla CEO, Elon Musk.
“We’re in talks”, Gabriel said according to reporting by Bloomberg Business. “I assume he [Elon Musk] will want public funds.”
The Economy Minister did not provide any additional information about the potential factory.
Tesla has so far reportedly denied that it has current plans to locate a factory in Germany.
The so-called Gigafactory design is a large manufacturing facility for lithium ion batteries which uses economies of scale to drive down prices.
The first factory is already under construction in the US state of Nevada and should a German factory go ahead, it would likely be the second such Gigafactory globally.
Germany an obvious location for Gigafactory
The economic rational for Tesla to build its second Gigafactory in Germany is obvious.
Germany is already a European leader in renewable power, with huge amounts of generation capacity being brought online in recent years.
Aside from its electric cars, Tesla this year announced its Tesla Energy division, which markets energy storage solutions for residential, as well as commercial and industrial uses.
Germany’s growing renewable power capacity – especially its solar power projects – could easily make use of large-scale energy storage in order to provide power at night or on windless days.
However, for this to be possible, the local cost of this energy storage needs to be brought down to affordable levels, and a very large number of batteries will need to be produced.
With this in mind, the construction of a local European Gigafactory makes good business sense.