Tesla CEO Elon Musk said Berlin would be the site of its first European factory as the manufacturer's expansion plans to power ahead.
Mr Musk said the company would also build an engineering and construction center in the German capital. Tesla previously stated that it aims to start production in Europe in 2021
The moves come as the company also has a serious investment in a Chinese plant facing increased competition in the electric vehicle industry.
Mr Musk made this announcement at an awards ceremony in Germany on Tuesday.
"Everyone knows that German engineering is exceptional and that is part of the reason why we find our Germany in Gigafactory," he said.
Mr Musk said the facility would be located near Berlin's new airport and would later give more details on what the factory would produce on Twitter.
The focus on Germany comes amid a growing appetite for electric cars in Europe.
In the coming years, the largest electric car manufacturing companies will be in Germany, France, Spain and Italy, an industry analysis showed.
Some 16 large-scale lithium-ion battery cells have been confirmed or are set to begin operations in Europe by 2023.
Tesla's European plan comes as car maker also moves forward with factory to $ 2 billion in Shanghai.
The company is looking to increase production in China, the largest auto market in the world, where sales are affected by tariffs triggered by the US-China trade war.
The Shanghai facility will produce Model 3 and Model Y. Cars, according to reports, the carmaker showed off its new Chinese-made cars to local media this week.
Still, Tesla has struggled with years of losses, fueling investors' doubts and casting shadows on its shares in recent years.
The company has not yet made an annual profit, although it has shown positive results in the last two quarters of 2018.
Last year, Tesla took aggressive steps to cut costs, cutting thousands of jobs and limiting other costs.