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Tesla gained conditional approval for its German gigafactory outside Berlin on Friday, ending months of delays for the EUR 5 billion (approximately Rs. 41,822 crore) groundbreaking plant, according to the state of Brandenburg.

The gigafactory, which is crucial to Tesla CEO Elon Musk's plans to unseat Volkswagen as Europe's market leader, was supposed to open last summer.

With a 25% share of European electric vehicle (EV) sales to Tesla's 13%, Germany's top manufacturer has the upper hand in Europe

Dietmar Woidke, the state premier of Brandenburg, said the development was "a tremendous step forward," adding that the Tesla facility would be a key industrial and technological driver for Germany and the region.

According to unions, 2,600 of the plant's expected 12,000 workers have already been hired, and Tesla is in talks with a number of local component suppliers to source as much as possible locally, cutting wait times and prices.

Volkswagen announced on Friday that it would invest about EUR 2 billion (roughly Rs. 16,729 crore) in a new factory near its Wolfsburg headquarters to produce the Trinity, the first of a new generation of electric vehicles for the German carmaker, highlighting the fierce competition that Tesla faces.

Tesla's 536-page conditional building permit does not mean the electric vehicle pioneer can begin production immediately. It must first demonstrate that it meets a number of criteria, including water usage and pollution control.

Only then will Tesla receive its long-awaited operating permit and be able to begin production of the 500,000 battery-powered vehicles it plans to build each year at its new plant in Gruenheide.

Late Friday, a Frankfurt Oder administrative court sided with environmental groups who had contested a licence awarded to a local water company to feed the Tesla site, putting another roadblock in the way of securing the facility's water supply.

However, the court stated that the water utility could correct the procedural mistakes in the licencing decision, allowing the water supply agreement to be preserved.

After meeting orders in Europe from its Shanghai facility in recent months while awaiting approval for the site, Tesla would be able to deliver its Model Y cars to European consumers sooner and more affordably if manufacturing were to begin in Germany.

Tesla intends to demonstrate compliance with the imposed conditions within the next two weeks, according to Axel Vogel, Brandenburg's environment minister, while complaints might be lodged during the next month.

which Musk said would take longer than building the facility during a fair on-site in October.

Local environmentalists have long feared that the facility will have a harmful influence on the area's ecosystem. Numerous public consultations, particularly focused on one element, slowed the process, with Musk voicing frustration with German bureaucracy on multiple occasions.

The facility, which Tesla has started building under pre-approval licences, will also contain a battery plant capable of generating more than 50 gigawatt hours (GWh) per year, far beyond European competitors.