Tesla is buying a German engineering company to automate factories
Tesla CEO Elon Musk.REUTERS/Beck Diefenbach
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On Tuesday, Tesla announced that it will acquire Grohmann Engineering, a German automated manufacturing company.
The terms of the deal, which is subject to German regulatory approval, weren't disclosed.
In a statement, Tesla described Grohmann as a "world-renowned engineering company in Prüm, Germany, which will become Tesla Grohmann Automation."
According to Tesla:
Accelerating a sustainable energy future is only possible with high-volume factories. They allow us to manufacture high-quality products with economies of scale, making them more affordable and accessible to the world. As the machine that builds the machine, our factories are so important that we believe they will ultimately deserve an order of magnitude more attention in engineering than what they produce. At very high production volumes, the factory becomes more of a product than the product itself.After increasing our output target to 500,000 cars per year by 2018, we began searching for the best engineering talent in automated manufacturing systems ...Led by founder and CEO Klaus Grohmann, Grohmann Engineering is one of the world leaders in highly automated methods of manufacturing. This transaction will bring Mr. Grohmann’s leadership, a world-class team and unique expertise in-house. Moreover, it will serve as the initial base for Tesla Advanced Automation Germany headquarters, with other locations to follow. We expect to add over 1,000 advanced engineering and skilled technician jobs in Germany over the next two years.
Tesla shares were trading up slightly pre-market, to $194.
Improving its manufacturing capabilities has been a major issue for Tesla throughout 2016, as the carmaker looks to go from producing roughly 100,000 vehicles annually to building 500,000.
Tesla is also bringing its massive battery factory in Nevada online, to produce the battery cells needed to serve that level of automotive manufacturing.
Germany has long been considered a manufacturing powerhouse, particularly in the automotive arena, with premier global carmakers including Mercedes, BMW, and Volkswagen.
Tesla CEO Elon Musk has both stressed that Tesla needs to improve its own manufacturing expertise and reinvent the entire manufacturing process. This is why Tesla used the "machine that builds the machine" language in its statement about the Grohmann acquisition.
Musk is aware that Tesla's actual production lags what the carmaker's California factory has achieved in the past, when it was jointly operated by General Motors and Toyota and had a capacity if 500,000 vehicles annually.
However, in a statement Tesla highlighted a 400% increase in production at its Fremont facility.
Tesla is also in the midst of $2.6-billion merger with SolarCity, including the assumption of billions more in SolarCity debt. Grohmann Engineering appears to be a firm that managed something in the ballpark of Euro 100 million in revenue in 2015, so that might provide us with some clues about how much Tesla might have paid for the company.
This is breaking news. We will update when we learn more.
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