Elon Musk has long wanted to feast on the lunch of German car manufacturers, but no one thought he would have the courage to do it in their own dining room.

When he announced this week that Tesla would build its first European factory near Berlin, there could be no doubt about what he was intending to do.

The German government was jubilant. Peter Altmaier, the Minister of Economy, said it was “another proof of how attractive Germany is as a location for car manufacturing” and a “milestone” on the country’s path to electromobility.

But there was also shock at Mr. Musk’s audacity. He was like a young entrepreneur challenging some of Germany’s most successful and long-established companies on their own turf. The conservative newspaper Frankfurter Allgemeine Zeitung called it a “declaration of war.”

Musk is “challenging German car manufacturers to a duel right in front of their own castle gates,” said Jan Burgard, a partner at Berylls Strategy Advisors and a former Audi manager. “You have to respect the guy; he is truly fearless.”

Others said the move would shake the German industry out of its complacency. “They have been sitting in their own diesel bubble for too long,” said Arndt Ellinghorst, an analyst at the investment consulting firm Evercore ISI. “It’s good that someone is coming in to challenge them.”

Tesla has provided scant details about its plans, but authorities said the new “Gigafactory” would be built in Grünheide, a small town southeast of Berlin, near its new international airport. Tesla also announced it would open a new design center.

Some were surprised that Musk chose to locate the plant in Brandenburg, a state around Berlin that has no automotive industry. It is hundreds of miles from Baden-Württemberg, where Daimler, Bosch, and Porsche are based, and from Wolfsburg, the city in Lower Saxony where Volkswagen is headquartered.

But the symbolism of the location near Berlin, one of Europe’s trendiest cities with a large tech talent pool, is significant, Musk said when unveiling the extensive plans.

“As a manufacturing site, Berlin sounds much cooler than some remote place in Poland, Hungary, or Western Germany,” said Ferdinand Dudenhöffer of the Center for Automotive Research at Duisburg-Essen University.

Thirty years after the fall of the Berlin Wall, ending the division between Soviet-controlled East and the West-oriented Federal Republic, the city, which the former mayor described as “poor but sexy,” has become a major magnet for young entrepreneurs in the tech and software development sectors. Its startups attracted 2 billion euros in just the first half of this year – 20 percent more than in 2018.

Tesla’s decision is a “shining example of Berlin’s international attractiveness,” said Stefan Franzke, head of Berlin Partner for Business and Technology, an agency that promotes investment in the city.

Germany’s own car giants were among the first to recognize this trend. Daimler and BMW announced last year that they would locate their new joint mobility services venture in Berlin, while Volkswagen launched the world’s first electric car-sharing service, WeShare, in the city this year.

“OEM companies wisely decided to provide jobs for a skilled workforce that still wants to lead a hipster lifestyle, rather than expecting programmers to knock on the doors of headquarters in Munich, Wolfsburg, or Stuttgart,” said Matthias Schmidt, an independent automotive analyst.

Brandenburg also meets all requirements due to its abundance of renewable energy sources. “We have more wind turbines per capita than any other region in Germany,” said the state’s economy minister, Jörg Steinbach, in an interview. “This means that in Brandenburg, Tesla can achieve its goal of producing CO2-neutral products.”

Tesla’s gambit is simply the latest investment related to electric vehicles in Eastern Germany. Earlier this month, VW began production of its first series production battery-powered car – the ID. hatchback – in the eastern city of Zwickau, while Chinese company CATL is building a battery plant an hour and a half from Erfurt.

Steinbach said that the East is attractive to investors because it is “more open to new technologies” than Germany’s automotive cities in the south. “The traditional car industry is not changing as quickly as it should,” he said.

For example, several German cities wanted to follow Hong Kong’s lead in switching to hydrogen fuel cell buses but “couldn’t find German models with this technology,” he said.

German companies have been inspired by Tesla’s example. Reeling from the diesel scandal, VW plans to invest 44 billion euros in electric vehicles, autonomous driving, mobility services, and digital upgrades to its factories over the next five years, and says it will produce more than 22 million battery-powered cars by 2028.

This important shift is driven by strict EU emissions rules set to come into effect in 2020, which will overshadow the future of the internal combustion engine. Germany’s government policy is also a factor. Berlin recently increased subsidies for electric vehicles and promised to install 50,000 new charging points across Germany over the next two years. The government says up to 10 million electric vehicles will be on German roads by 2030, compared to 220,000 currently.

This transition will lead to massive disruptions in Germany. Anticipating the upcoming changes, Daimler warned on Thursday that it would cut personnel costs by 1.4 billion euros and reduce 10 percent of managers worldwide. Germany narrowly avoided a technical recession in the third quarter, and many economists blame the strain automotive companies are experiencing as they transition to an electric future for the downturn.

With traditional companies making big bets on electricity, Tesla will soon face serious competition. The VDA, Germany’s main automotive lobby, was furious about Mr. Musk’s announcement.

German carmakers, said VDA head Bernhard Mattes, have already invested in electromobility and “will increase their range of electric models fivefold by 2023.” “We are not shying away from competition – quite the opposite,” Mattes said.

As Germany becomes a major player in the electric vehicle sector, Tesla’s gambit makes sense because the company needs to be where the action is, experts say.

“There is no doubt that by the end of the 2020s, Europe will be 20-30 percent fully electric and will become the largest market after China,” said Mr. Ellinghorst from Evercore. “And if Musk wants to play in Europe, he needs to operate in Europe and be recognized as a European player.”