An upcoming EV chip manufacturing plant in Germany is poised to finally tackle the chip shortage that has ravaged automakers worldwide.
If one thing has become eminently clear over the past three years, it is the fact that the supply chains that bring us everything from cars to surgical masks are incredibly delicate and, further, can benefit from numerous points of origin. Perhaps nowhere has this been seen better than in the scramble for automotive computer chips in the wake of COVID-19 across the world in 2020. Now, according to a press release from German chip conglomerate ZF Friedrichshafen (ZF) and American chip maker Wolfspeed, the two will be collaborating to meet this demand with a new chip fabrication plant in Germany.
The company itself confirmed the plant this morning. The upcoming factory “will be the world’s largest, utilizing innovative manufacturing processes to produce next-generation Silicon Carbide devices.” But the importance of the factory isn’t just due to its potential to meet the near overwhelming demand of automakers for EV computer chips, but in its strategic location.
Saarland, a German state located on the border with France, will reportedly be the home of the upcoming fabrication location. From there, Wolfspeed and ZF would be able to quickly and efficiently meet the demand for EV chips of Porsche in Stuttgart, BMW in Bavaria, and Mercedes in central Germany. Further, it would also be able to meet upcoming demand from Renault and Stellantis just over the border in France.
Even outside of that immediate radius, Tesla’s massive Giga-Berlin facility and Ford’s numerous production locations found in Northern Germany can benefit from this new supply.
Hier in Ensdorf im Saarland, wo einst Kohle verstromt wurde, entstehen mit der neuen Fertigungsanlage viele Arbeitsplätze und effiziente Halbleiter. Wir brauchen sie für E-Autos, Erneuerbare Energien, für die #Transformation. Wolfspeed und ZF stärken so den Wirtschaftsstandort ?? pic.twitter.com/tEt7jvPsus
— Bundeskanzler Olaf Scholz (@Bundeskanzler) February 1, 2023
Neither a production start date nor an estimate of production capacity have been announced, though construction will begin in the first half of this year, pending confirmation from the European Unions. The upcoming plant will supposedly cost €3 billion ($3.27 billion), with ZF holding a minority in the venture. This is part of Wolfspeed’s previously announced $6.5 billion global expansion plan, which included two other production locations in the United States.
German officials also see the new project as a win, one telling Reuters, “Amid the concerns that the U.S. wants to divert investments from Europe with its Inflation Reduction Act, we’re showing that a U.S. firm wants to invest in Germany.” However, it should be noted that Wolfspeed and ZF are likely attracted to Germany following the success of Europe’s own “IRA,” which plans to invest 45 billion euros ($49.03 billion) into computer chip manufacturing throughout the continent. The plan has yet to be finalized by the European Parliament.
“This project is a great transformation driver and a job engine for a traditionally industrial region. Furthermore, it bundles important know-how in Europe and contributes to the implementation of the European Green Deal by reducing energy consumption and CO2 emissions,” said Saarland Minister-President Anke Rehlinger. “We’re proud to have Wolfspeed, and have our region play such a vital role in advancing Silicon Carbide semiconductor innovation.”
The company’s press release noted that Wolfspeed specializes in “silicon carbide chips” typically used in high-voltage use cases, such as EV drivetrains. Manufacturers specifically choose the chips for their ability to operate under high loads while retaining energy efficiency. Wolfspeed already produces these chips en masse and has announced “the world’s largest chip plant,” which will be built in the United States and come online by 2030.
Wolfspeed and ZF have clearly chosen the ideal location for their upcoming plant. And with the ongoing battle for cheaper and cheaper EVs, the company is poised to benefit simply due to its physical proximity. Suppliers are finally considering moving away from China as the sole chip supplier, and in the quest for electrifying mobility, this may be key to a faster transition.
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Tesla shared a striking video showcasing the decommissioning of the original Model S and Model X assembly line at its Fremont Factory in Northern California. Completed in just 46 days, the teardown involved heavy machinery dismantling concrete pits, removing robotic arms and conveyors, and clearing the space for new production.
The post, captioned “End of an era,” captured both the end of a historic chapter and Tesla’s aggressive pivot toward its next major initiative, Optimus.
End of an era: Decommissioning the original Model S & X assembly line in just 46 days pic.twitter.com/kGEdfhl62h
— Tesla Manufacturing (@gigafactories) July 10, 2026
The decision to retire the Model S and Model X originated during Tesla’s Q4 2025 Earnings Call in late January 2026. CEO Elon Musk announced that production of the company’s flagship sedan and SUV would wind down by the end of Q2 2026, describing it as bringing the programs to an “honorable discharge.”
Custom orders ceased around early April 2026, with the final vehicles rolling off the line in early May. A special signature delivery ceremony on May 20 marked the emotional close for these vehicles, which had defined Tesla’s early success and luxury EV segment since the Model S launch in 2012.
The primary reason for tearing down the lines was to repurpose the valuable factory floor space for high-volume production of Tesla’s Optimus humanoid robot. Musk had indicated on Earnings Calls that the Fremont S/X line would be replaced by a dedicated Optimus manufacturing line targeting a capacity of one million units per year.
This move aligns with Tesla’s broader strategic shift from traditional vehicle manufacturing toward robotics and artificial intelligence, leveraging the company’s expertise in autonomy, AI training, and high-volume production.
Optimus, Tesla’s general-purpose humanoid robot, is designed to perform repetitive or dangerous tasks in factories, warehouses, and eventually homes. Powered by Tesla’s AI and Neural Networks, it aims to be a versatile, affordable platform. Production of Optimus Gen 3 is already underway in limited form at Fremont, with full-scale output on the converted line expected to begin in late July or August.
Tesla is targeting rapid scaling, with internal ambitions pointing toward tens or even hundreds of thousands of units annually by the end of 2026.
Longer-term, Tesla is constructing a much larger second-generation Optimus facility at Giga Texas, with potential capacity reaching millions of units per year. The company views Optimus as a transformative product that could eventually surpass its automotive business in scale and value, enabling widespread deployment of useful robots across industries. CEO Elon Musk has even predicted it would be the most popular product of all-time.
As one era closes at Fremont, another is rapidly taking shape.
Elon Musk posted a candid admission on his social media platform X on June 9, declaring that he had been “clearly wrong” about Anthropic. The statement marked a notable reversal from his earlier skepticism toward the AI company.
In September, Musk had written, “Winning was never in the set of possible outcomes for Anthropic,” reflecting his view at the time that the startup had lacked the foundation or even the trajectory to succeed in what is an incredibly intense race for advanced artificial intelligence.
Musk’s latest post came amid discussion of Anthropic’s reliance on external compute resources. He praised the company’s progress, stating that Anthropic is “obviously currently the leader in AI” and that “no company has released a model as good as Mythos/Fable,” with expectations of a strong follow-up in Mythos 2.
The tone shifted dramatically from dismissal to acknowledgement of superior performance.
I was clearly wrong about Anthropic. They are obviously currently the leader in AI. No company has released a model as good as Mythos/Fable and they will undoubtedly have Mythos 2 ready soon.
And I would never cut them off in a way that hurt them badly, even as a competitor.…
— Elon Musk (@elonmusk) July 9, 2026
The context of Musk’s comments added significance. Anthropic has been operating under a recent compute deal with SpaceXAI, Musk’s AI infrastructure-focused venture. The pair entered a short-term GPU lease agreement initiated in May, providing Anthropic access to critical computing power for training and deploying its frontier models.
SpaceXAI signs agreement with Anthropic for massive AI supercomputer access
Some observers had speculated that Musk could leverage this dependency to disadvantage a rival. Musk directly addressed the possibility, writing, “I would never cut them off in a way that hurt them badly, even as a competitor. That’s not my style.”
To support his commitment to ethical competition, Musk referenced concrete examples from his other companies. Tesla famously open-sourced its entire portfolio of electric vehicle patents in 2014. The move was designed to accelerate the global adoption of sustainable transportation technology rather than protect proprietary advantages.
Tesla also made its Supercharger network available to competing electric vehicle manufacturers, transforming what could have remained an exclusive charging ecosystem into a shared infrastructure that benefits the broader industry and reduces barriers for EV adoption.
Musk further pointed to SpaceX’s practices, noting that the company launches satellites for competing commercial systems “with no increase in price or use of unfair terms.” He extended the principle to his social platform, observing that “even my worst enemies attack me on this platform,” underscoring preference for open discourse over retaliation.
These examples have illustrated Musk’s long-standing philosophy that long-term technological progress is best served by open competition and infrastructure sharing rather than leveraging market power to stifle rivals. In the fast-evolving AI sector, where compute resources and model capabilities determine leadership, Musk’s stance suggests a willingness to compete on innovation and performance alone.
Musk’s admission arrives as SpaceXAI itself advances its own frontier models while maintaining business relationships across the ecosystem. By publicly correcting his earlier assessment and reaffirming principles of fair play, Musk highlights a model of competition that prioritizes advancement of the field over short-term tactical advantages.
A Tesla analyst believes the company’s Full Self-Driving suite is close to an “inflection point,” where people will finally realize that it is more than what it appears, similar to how many view the iPhone.
Pierre Ferragu, an analyst who has covered Tesla for many years at New Street Research, says the Full Self-Driving suite is one piece of evidence supporting the view that a Tesla is more than a car. He compared it to the iPhone and noted that the high price tag seemed like a lot for a phone early on. Then people realized the iPhone was more than just something you make calls with. It made their lives simpler.
🚨 Analyst @p_ferragu says Tesla Full Self-Driving is at an “inflection point” in a recent commentary:
“A Tesla is not a car, the same way an iPhone was not a phone. As a tool that gets you to work peacefully every morning, it is not expensive. Give us 2 more quarters to see… pic.twitter.com/tm6xFrjVPV
— TESLARATI (@Teslarati) July 10, 2026
Suddenly, that price tag was justified.
Tesla offers several models under the average transaction price for a new vehicle, which was above $49,000, according to Kelley Blue Book. However, that does not take into account that many people can still not afford a $35,000 vehicle. Ferragu offers his thoughts:
“Remember when the addressable market of the iPhone was 10 million units? Then people realized how good it was, and now, nearly 250m are sold every year.
A similar evolution for Tesla is still on the table. A Tesla is not a car, the same way an iPhone was not a phone.
A model 3 at $35k + $100 per month is too expensive for most, but only as a car, the same way a $600 iPhone was too expensive for most, until most realized it was much more than a phone.
As a tool that gets you to work peacefully every morning, it is not expensive.”
This point is valid, especially considering the iPhone’s impact on the cell phone market. There are still a handful of players, but most people you know have an iPhone. The iPhone ties into Apple’s other ecosystem of products.
This is how Tesla plans to infiltrate the automotive market, and once the company offers a fully autonomous suite, or something that can allow for unsupervised self-driving, more and more people will flock to Tesla.
Ferragu believes Tesla needs two additional quarters of development before things will truly change. He didn’t elaborate on what will happen in two quarters, but he said it will give us all time to “see where this is heading.”
It is really quite interesting to see people’s reactions when they find out what a Tesla is capable of. Full Self-Driving is a great tool for taking stress out of travel; I use it daily, and it has made it really difficult to consider taking any other car on a drive of practically any length.
To me, it is really hard to believe that people will not at least seriously consider a Tesla as their next car if they experience Full Self-Driving. This is a major point for those who argue that Tesla should advertise in some way.
Tesla shows rapid teardown of Model S and X lines, paving the way for Optimus at Fremont
Elon Musk admits he was ‘clearly wrong’ about Anthropic
