Electric vehicle giant Tesla plans to boost production at its factory near Berlin in the 2026 financial year as demand recovers and profits improve, according to the company's annual report for its German manufacturing unit.

The company forecasts a significant increase in production volume compared with the previous year, Tesla Manufacturing Brandenburg SE said in its 2025 annual report.

It said capacity utilization was also expected to rise and that the plant would supply more than 30 markets while expanding into additional ones.

Tesla earlier this year said it aimed to increase output at Gruenheide to as many as 7,500 vehicles a week, or about 375,000 a year, while expanding battery cell production.

The company plans to create 3,500 new jobs and says it aims to integrate the entire value chain from battery cells to finished vehicles at the site.

Tesla said the expansion remained subject to economic conditions and warned that escalating geopolitical tensions and potential supply chain disruptions could affect its outlook.

It also said plans for full battery cell production at Grennheide depended on market conditions, citing challenges facing battery manufacturing in Europe compared to the U.S. and China.

The German unit reported net profit of 77.1 million euros ($88.2 million) for 2025, up by about 20 million euros from the previous year, despite what it described as a challenging market environment.

Revenue fell to 7.1 billion euros from 7.7 billion euros in 2024, while vehicle production declined to about 202,000 units from around 211,000. Tesla attributed the drop mainly to a model changeover and the introduction of new variants, adding that production remained stable overall.

The Gruenheide factory, Tesla's only European production site, opened in March 2022 and currently produces the Model Y. It employed about 11,000 people, including temporary workers, at the end of 2025, according to the report.