"Will build batteries, powertrains & vehicles, starting with Model Y", Musk also tweeted, a few seconds after the initial, multi-coloured fanfare. Adding a European base of operations could help Elon Musk's firm avoid the worst effects of an ongoing trade war between the U.S. and China.
At present, 16 lithium ion battery cell plants are confirmed or due to begin operations in Europe by 2023, underlining the level of competition that Tesla faces in future.
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Musk said that the plan is for the factory to be built near Berlin's new airport, which is located just outside the city limits in neighboring Brandenburg state and now slated to open next year after years of delays.
During an award ceremony in the German capital, Mr Musk that "we've made a decision to put the Tesla Giga factory Europe in the Berlin area".
When Tesla built a auto manufacturing facility in Shanghai, China, the company dubbed that "Gigafactory 3".
The announcement dashes hopes that the facility could be constructed in Britain, something Musk had previously suggested was likely.
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Musk also joked that the factory would need to get started more efficiently than the nearby Berlin-Brandenburg Airport has done. Analysts at Oddo-BHF Group said in a report Wednesday that the move "is bound to be a major challenge for Tesla", because labor and energy costs for carmaking in Germany are among the highest worldwide. "But in reality it comes as little surprise". "Brexit uncertainty has stymied investment in the automotive industry, which is down by over 80pc in the last three years".
In addition to Brexit, Bailey highlighted that another factor could have influenced Musk's decision.
German giants are behind in adapting fleets to meet new European emissions limits, and have left it until late to commit to electric drive in a big way.
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"Musk looked at where the big action and investment is taking place and concluded that it isn't in the United Kingdom, sadly", he continued.