"Everyone knows that German engineering is outstanding, for sure".
A more precise location at the moment is "in the Berlin area", "Located near the new airport" (BER airport).
By building a plant in Germany, Tesla will be able to add the "Made in Germany" accolade.
Mr Musk also cited risks surrounding the UK's exit from the European Union for his decision, according to AutoExpress.
Assuming both the China-based Gigafactory and its Berlin equivalent finish construction over the next couple of years, Tesla's overseas influence could expand considerably.
"We think we now have the chance, in the coming years, to become an important worldwide centre in this future-oriented sector", he said.
Berlin also has earmarked financial support for manufacturing electric auto battery cells.
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Mass production of the auto will start in 2021 and the vehicle will be sold under the Hengchi brand, China Evergrande said in a statement on Tuesday.
"Elon Musk has an ability to make a splash", said John Boyd, principal of an eponymous manufacturing site-selection firm based in Princeton, New Jersey.
While much of Germany's vehicle industry is based in the south, Berlin has become a hub for tech start-ups since the fall of the Wall 30 years ago. "We hope this sets an example", Birgit Dietze IG Metall's regional head said on Wednesday.
Even Germany's auto industry association, VDA, welcomed the arrival of a US competitor.
Is this important for Germany? "We don't shy away from competition, quite the opposite".
Tesla's first "Gigafactory" was constructed in the USA state of Nevada, and its vehicles are built mostly at a factory in Northern California.
While Germany's renowned vehicle industry is mainly based in the south of Europe's biggest economy, the capital has become a hub for start-ups and has attracted many creative and technology firms since the fall of the Berlin Wall three decades ago.
"Berlin rocks", Mr Musk said, adding Tesla would build an engineering and design centre in the German capital.
The company has an engineering firm in Pruem, Germany, that specialises in automated manufacturing systems for battery plants.