Tesla’s Challenges Mount in Europe with Arson Incident and Expansion Setbacks

Tesla Inc’s (NASDAQ:TSLA) European Gigafactory near Berlin experienced a production halt and power outage due to a suspected arson attack on an electricity pylon nearby early on Tuesday.

The stock price dropped close to 2% after the update.

Although the fire did not reach the Tesla facility, it necessitated the evacuation of the site and the cessation of production.

This event adds to Tesla’s recent challenges in Europe, including union demands in the Nordics and disruptions caused by attacks on shipping in the Red Sea, Reuters reports.

German authorities are investigating the potential arson with a comprehensive approach amidst previous environmental protests against the factory initiated by CEO Elon Musk two years ago.

Media reports of bomb disposal units being deployed due to signs warning of buried ordnance remain unconfirmed by police.

Energy company E ON SE is addressing the damage to the high-voltage pylon, with electricity restored to the surrounding areas except for a significant industrial site and a logistics center.

Tesla’s expansion plans for the plant, aiming to double its capacity to produce 100-gigawatt hours of batteries and 1 million cars annually, faced a setback when residents opposed the removal of trees for the expansion.

Despite these obstacles, Tesla intends to dominate the European market, even as environmental activists protest by occupying tree houses in the targeted expansion area.

Last month, citizens in Gruenheide voted against clearing forest for Tesla’s additional infrastructure, putting the expansion’s future in local authorities’ hands.

Nevertheless, the Gigafactory achieved a production milestone of 6,000 cars in a week for the first time in January.

As of November, Tesla had more than doubled new vehicle registrations in the European Union.

In 2023, Tesla registered 248,601 new cars from January to November, marking a 115.8% surge.

However, it also battled fierce competition from Chinese automaker SAIC Motors.