Tesla's chief executive, Elon Musk, has said that Berlin will be the site of the first European factory in which the car manufacturer's expansion plans power in the future.
Mr Musk said the company would also build an engineering and design center in the German capital.
Tesla previously stated that it aimed to start production in Europe in 2021
The traits come as the company, which has also invested heavily in a Chinese factory, and has intensified competition in the electric car industry.
Mr Musk announced the announcement at an awards ceremony in Germany on Tuesday.
"Everyone knows that German engineering is outstanding, and that is part of the reason why we are locating our Gigafactory Europe in Germany," he said.
Mr Musk said the facility would be located near the new Berlin airport and later provided more information on what the plant would produce on Twitter.
The focus on Germany comes amid growing appetite for electric cars in Europe.
Over the next few years, the largest electric car production facilities will be in Germany, France, Spain and Italy, industry analysis shows.
Some 16 large-scale lithium-ion battery cell plants are confirmed or due to start operations in Europe by 2023.
Tesla's European plans come as the carmaker also moves forward with a $ factory 2 billion (£ 1.6bn) in Shanghai.
The company wants to increase production in China, the world's largest car market, where sales have been hurt by tariffs triggered by the US-China trade war.
The Shanghai plant will produce Model 3 and Model Y cars. The carmaker reportedly showed off its new China-produced vehicles to local media this week.
Still, Tesla has struggled with many years of losses, raised doubts from the investor and cast a shadow over the shares in recent years.
The company has not yet made an annual profit, although it recorded positive results in the last two quarters. of 2018.
Last year, Tesla took aggressive steps to cut spending, cut thousands of jobs and recoup other expenses.