Today at Das Goldene Lenkard, the German new car-model award ceremony, Tesla made a surprise announcement: the location for the European Gigafactory will be in the Berlin area.

Leaving aside the announcement itself, the video of the ceremony itself feels surprising and historic in a lot of ways –– so let’s pick it apart together here. All videos are Twitter sized for easy sharing.

Apparently Germans have a ceremony like the Oscars for new car models. The Golden Steering Wheel awards in Berlin named the Tesla Model 3 the winner of the best “Mittel Oberklasse” car award. Tesla beat out the Audi A4 and the BMW 3-series to win the top spot.

These are the best cars in the world, from some of the biggest and most famous car companies on Earth. The Audi A4 is made by the biggest car company on Earth by sales. The BMW 3-series is classic. Both are German native. And yet the Model 3 still won. This is just insane. Germans appreciate just how transformational this product is.

Once they pass the microphone to Elon, he makes his announcement:

“That’s news!”

You can hear gasps from the audience when Elon announces the decision. When was the last time you heard a crowd get that excited about a factory?

The Tesla CEO joked that in the future he might arrive by rocket, hinting that he’s perhaps been thinking more about using Starship to travel between any two cities on Earth in around 30 minutes lately:

Towards the end of the clip, the fun really begins –– they bring Volkswagen CEO Herbert Diess onto stage to have a little chat with the CEO of Tesla.

😮🍿

Here, you have the CEO of the biggest car company on Earth congratulating Tesla on beating them. He thanks Elon and says Tesla is the innovator that is pulling them along.

Think about how bizarre this is. Tesla is a little tiny new car company that sold 250,000 cars in 2018. That same year Volkswagen Group, which has been around for 82 years, sold almost 11 million cars. And yet Volkswagen is looking to Tesla for the future. German media asks Elon: “Why are we 8 to 10 years behind?”

He disagrees that they’re that far behind, but these kinds of fears have become a common sentiment growing in the German mainstream media. Historically, Germany has created the most desired luxury cars in the world. These are smart people who know their stuff –– and they’re blown away by Tesla’s technology. They’re being forced to change the course of the German auto giants because they’re worried about their future.

The Model 3 changed everything. Forget about the award, and just look at the effect it’s had on the leaders of the global auto industry standing in this room. This is a watershed moment.

When asked to explain why Germany is behind, Musk gets into The Innovator’s Dilemma. How is it possible that a small California upstart could end up so far ahead of the rest of the global auto industry? In a way, it’s completely natural.

Volkswagen has tons of money invested in old factories, old technologies, old service centers and old ways of doing business. It would be stupid of them to mess up a profitable business chasing some crazy idea like electric cars that may never catch on.

Tesla on the other hand, doesn’t have any polluting vehicle technology or polluting vehicle factories. It started from a blank slate, and had to make electric vehicles work or the company would die. Both companies have amazingly talented teams, of course –– but different incentives brought them to where they are today.

Only now, when Volkswagen starts to fear long-term damage from new competitors like Tesla, will they be forced to take a hit on profits and invest in transitioning to EVs.

Diess notes the historical significance of the night. The fact that an electric car won in a fair competition against Germany’s best luxury gas cars shows that the debate is over. For years people wondered if the electric car could ever really replace the internal combustion engine. Now, very few people are still in denial of the inevitable.

The global auto industry has woken up to the reality of the situation. Volkswagen CEO Diess warns not to count his team out: “We will keep you alert”, he promises.

While Tesla’s technology is amazing, German engineering and German luxury cars are stunning, and Tesla wants to absorb those great qualities into its products.

That’s why Tesla chose Berlin as the site of it’s European Gigafactory, and why it’s opening an engineering and design center in Berlin as well. Tesla will absorb German know-how and heritage into it’s products, and participate with Volkswagen and others in building a thriving EV economy.

Those fearing that Germany might be left behind can now rest assured that the German auto industry will play a major part in an electric, autonomous future… a future where we see electrified cars of all makes and models.

Musk mentions that the new factory will be near the Berlin Brandenburg Airport. There are some jokes and groans when the airport is mentioned –– the construction of the airport has apparently been a complete disaster, and the opening has been delayed over 7 years.

To close off a jaw dropping meeting between the two auto giants, Diess admits that he has not gone electric yet (he’s still driving a Volkswagen Golf GTI). Supposedly his company is all in on electric cars… but the CEO still goes to the gas station.

In his last line he speaks for both himself and Volkswagen at large: “Soon, I will change”.

The electrification revolution is really sneaking up on everyone, isn’t it? First it happens really slowly… then all of a sudden it happens really fast.

Watch or download the full video below: