Tesla's chief executive, Elon Musk, said Berlin would be the site of its first European factory as plans for the carmaker's expansion are ahead.
Mr Musk said the firm would also build an engineering and design center in the German capital.
Tesla has previously said it aims to launch production in Europe in 2021.
The moves come as the firm, which has also invested heavily in a Chinese factory, faces increased competition in the electric vehicle industry.
Mr Musk announced the announcement at an awards ceremony in Germany on Tuesday.
"Everyone knows that German engineering is remarkable and that's part of the reason we locate our Gigafact Europe in Germany," he said.
Mr Musk said the facility would be located near the new Berlin airport, and later gave more details on what the Twitter factory would produce.
Germany's focus comes amid growing appetite for electric cars in Europe.
Over the next few years, the largest electric car production plants will be in Germany, France, Spain and Italy, industry analysis showed.
About 16 large lithium-ion battery plants have been confirmed or are due to start operating in Europe by 2023.
Tesla's European plans come as the carmaker also advances its $ 2 billion factory in Shanghai.
The firm seeks to boost production in China, the world's largest car market, where sales have been marred by tariffs triggered by the US-China trade war.
The Shanghai facility will produce Model 3 and Model Y cars. The carmaker reportedly showed off his new China-made vehicles to local media this week.
However, Tesla has struggled for years with losses, fueling investor suspicions and overshadowing its stocks in recent years.
The firm has yet to make an annual profit, though it has seen positive results in the last two quarters of 2018.
Last year, Tesla took aggressive steps to cut costs, cut thousands of jobs and take advantage of other costs.