Berlin Leading economists in Germany attach great importance to the location decisions of the US electric car manufacturer Tesla for Grünheide (Brandenburg) and the US chip manufacturer Intel for Magdeburg (Saxony-Anhalt).
“We are currently experiencing in the new federal states that the maturation of conurbations into growth centers is also affecting rural regions,” said the director of the German Economic Institute (IW), Michael Hüther, the Handelsblatt. “Without a corresponding nationwide perception, a reindustrialization can be observed in the new federal states outside of Saxony.”
Hüther sees a good scientific landscape and transport infrastructure as decisive for such a development. The increasing investments would create opportunities for network effects.
The President of the German Institute for Economic Research (DIW), Marcel Fratzscher, does not see the recent settlements as a “trend reversal” with an increased investor focus on the new federal states.
However, he sees good opportunities if East Germany develops its own strengths and does not try to copy other regions in Germany or Europe. “Renewable energies and sustainable technologies could become such a strength and a promising model for success for the East,” Fratzscher told the Handelsblatt.
Many large investments in East Germany
However, East German regions “urgently have to push ahead with reforms,” added the DIW boss. “You have to reduce bureaucracy, increase public investment in infrastructure, research and education and develop a welcoming culture with a high tolerance for diversity and openness,” said Fratzscher. There is still some catching up to do here.
This Tuesday, Tesla wants to deliver the first Model Y electric cars from the new Gigafactory in Grünheide near Berlin. A big event is planned with Tesla boss Elon Musk and prominent representatives from federal and state politics. The Tesla boss wants to personally hand over the first vehicles to customers. Chancellor Olaf Scholz (SPD) is expected in Grünheide, as is Economics Minister and Vice Chancellor Robert Habeck (Greens).
>> Read also: Record pace despite setbacks – Like Tesla and Brandenburg outsmarted the bureaucracy
The US group is not the only major investor. Also this year, BASF plans to start manufacturing battery material in Schwarzheide, Brandenburg. The battery specialist Microvast has its European headquarters in Ludwigsfelde and assembles batteries for commercial vehicles there. The German-Canadian Rock Tech Lithium is investing almost half a billion euros in Guben on the Polish border in a production plant for lithium hydroxide.
Other East German federal states are also reporting billions in investments. In Thuringia, the Chinese CATL group is building a battery factory for up to 1.8 billion euros, which could start as early as 2022. The Bosch semiconductor plant, one of the most modern chip factories in the world, has been producing in Dresden since mid-2021.
Elon Musk wants to personally hand over the first vehicles
Above all, Intel’s new plans look gigantic. In a first expansion stage, the US group wants to build two directly adjacent semiconductor plants in Magdeburg in order to produce processors and graphics chips there from 2027. The company initially intends to invest around 17 billion euros. According to Intel, around 3,000 high-tech jobs and tens of thousands of additional jobs will be created at suppliers.
But getting involved in Germany is not without its pitfalls. Tesla, for example, originally wanted to roll the first cars off the assembly line last summer. But the approval process was delayed, partly because Tesla added a battery factory to the building application.
The state of Brandenburg finally approved the project on March 4th. The car factory is already there, built at your own risk over almost 20 early registrations. In a first phase, it is planned that Tesla will build around 500,000 cars a year in the new plant with around 12,000 employees.
>> Read here: Head of the employment agency praises Tesla – “The pay is just amazing”
Brandenburg’s Prime Minister Dietmar Woidke (SPD) was relieved that Tesla can now get started. “We have proven that even with a somewhat complicated German permit law, such a large investment can be realized in little more than two years,” he said.
Woidke expects the Gigafactory to have a signal effect for other investors. “We’re seeing a trend reversal,” he said. Eastern Germany as a location has become much more attractive to investors, which is not least due to the availability of green electricity.
In mathematical terms, Brandenburg can already cover 94 percent of its electricity requirements from renewable energies, explained Woidke. “We are the leaders in Germany there.”
The Federal Ministry of Transport draws a positive balance
For the Vice President of the SPD Economic Forum, Matthias Machnig, the latest US investments show that the East has always been underestimated as an investment location. “With Tesla and Intel, that will change,” Machnig told Handelsblatt. “Only through such investments and the resulting structural effects can there be harmonization between East and West.”
Green economic politician Dieter Janecek shares Woidke’s assessment. “It is becoming increasingly clear that the east and north of Germany have an increasingly important location advantage due to the high availability of renewable energies,” he told the Handelsblatt. “This will be a problem, especially for Bavaria with its wind power blockade.” Intel decided against a possible location in Upper Bavaria.
The Federal Ministry of Transport also draws a positive balance of the Tesla settlement. “The speed with which the Tesla factory was approved and built shows what is possible when the will is there,” said FDP State Secretary Daniela Kluckert to the Handelsblatt. The fact that this “success story” comes from East Germany is all the nicer.
>> Read here: “Elon Musk is a total workaholic,” says Brandenburg’s Economics Minister
At the same time, Kluckert confirmed the plans of the traffic light coalition to halve the duration of planning and approval procedures. “Tesla and Brandenburg are now showing us that this is also possible,” she said. The Greens politician Janecek adds: “A significant simplification of approval and planning procedures is absolutely urgent.”
The SPD politician Machnig said that the Tesla settlement showed what is possible in terms of planning and approval if the state, municipalities and authorities work together. “This must become the standard throughout Germany,” he emphasized.
In addition, the previous planning and approval law must be fundamentally revised. “It must not only have a cosmetic character,” said Machnig. “The right must become an enabling right.”
For the economist Hüther, too, “efficient, reliable and fast administrative action” is of central importance. “A general acceleration will undoubtedly help,” said the IW boss. However, “direct care and a willingness to talk to people about large projects” are always necessary.
More: This is how an interview with Elon Musk goes