Tesla Eyes European Production as U.K. Deliveries Get Underway

Source: Tesla

Just as Tesla Motors (NASDAQ:TSLA) introduces a modified Model S sedan with right-hand drive slated for the U.K. market, the company also said that once European sales reach 160,000 units per year, the company will look into building a facility in the region, Automotive News reports.

Tesla is also planning to open a European research and development center in the U.K. either next year or the year after, and will expand its final assembly plant, Tilburg, in the Netherlands, where batteries are reinstalled back into Tesla vehicles imported into Europe from the United States, according to Automotive News. Tesla’s release of a right-hand drive model is crucial in working toward these goals, as the U.K. is among one of the most robust automotive markets in Europe.

“My aspirations for Europe are that we sell a comparable number of cars in Europe as the U.S.,” Musk told Automotive News Europe at an event in London that marked the delivery of the first Model S sedans in the U.K. Tesla sold nearly 23,000 units globally last year as the company continues to work through its order backlog; it’s aiming for production of 35,000 units for 2014.

Norway is currently Tesla’s largest European customer, but it’s expected that the U.K. will overtake the Scandinavian country once deliveries are underway. The U.K.-edition Model S begins at 49,900 pounds (61,770 euros, or $83,249) and is sold at the company’s only current U.K. dealership, in London’s Westfield shopping mall, Automotive News said. 

Source: Tesla

However, that was only a part of the latest Tesla news. In order to encourage further electric vehicle adoption, Tesla is reportedly considering opening up part of its patent portfolio to help other automakers build “serious electric vehicles,” which Musk says they seem incapable of. Tesla didn’t come right out and say that, of course, but Musk acknowledged that the company was “planning on doing something fairly significant on that front, which would be kind of controversial with respect to Tesla’s patents,” per Automotive News.

This could have broader implications that will prove beneficial to Tesla in the long run. Once the company constructs its gigafactory, Tesla will be a major stakeholder in what is slated to be the largest lithium-ion battery production operation the world has seen yet, which sets Tesla up nicely to sell those units to other automakers, provided the company can get them hooked. By providing the source of the batteries, Tesla will be able to benefit from widespread adoption of electric vehicles, instead of just those that roll off its production line.

While Tesla is gearing up in Europe, it has similar ambitions in China, where it hopes to construct a production facility that will allow it to circumvent China’s hefty 25 percent import tariff on the cars. Musk contends that sales of Tesla’s cars will be evenly split between China, Europe, and the United States.

Capacity constraints have been a principal inhibitor of Tesla’s growth, both domestically and internationally. The gigafactory is expected to relieve much of those issues and allow Tesla to not just clear out its domestic backlog, but expand rapidly into new markets, as well.

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