Why is Tesla Motors Inc (TSLA) buying this German engineering company?
Tesla Motors Inc has announced that it has agreed to acquire Grohmann Engineering, an engineering company based in Prüm, Germany. The automated manufacturing company, headed by its founder and CEO Klaus Grohmann, is considered one of the world leaders in highly automated manufacturing methods. According to Tesla, Grohmann Engineering will be renamed Tesla Grohmann Automation after the deal closes, which is subject to German regulatory approval. The automaker has not disclosed the terms of the deal.
Tesla purchases Grohmann Engineering as part of its efforts to make its factories “the most advanced in the world”. The automaker said in a statement that “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.
Tesla plans to hire more than 1,000 technicians in Germany
Tesla Motors Inc has said it needs top engineering talent in automated manufacturing systems to meet its goal of producing 500,000 cars per year by 2018.
“As the machine that builds the machine, our factories are so important that we believe they will ultimately deserve an order of magnitude more engineering attention than what they produce. With very high production volumes, the plant becomes more of a product than the product itself, ”added the electric car maker.
Grohmann Engineering is an automated manufacturing company. The automaker said the deal will bring Grohmann leadership, a world-class team and unique in-house expertise. In addition, “it will serve as the initial base for Tesla Advanced Automation Germany’s head office, with further locations to follow.”
The automaker will use Grohmann’s expertise to produce several critical parts of its automated manufacturing systems in Germany. The company plans to create more than 1,000 jobs for advanced engineers and skilled technicians in Germany over the next two years.
Tesla’s major problem – Improve manufacturing capabilities
Business intern said improving its manufacturing capabilities has been a major issue for the electric car maker throughout this year. The automaker wants to improve its manufacturing expertise, as it plans to increase production from around 100,000 vehicles per year to 500,000.
The automaker is also working on its huge battery factory in Nevada. The plant is designed to produce battery cell production, which is expected to start by the end of this year. Last week, CEO Elon Musk confirmed that his company created a new glass technology group develop its own products. He told analysts that the new glass technology group will produce its own glass technology for use in automotive applications, starting with the upcoming Model 3.
The automaker added that it had increased the production rate at its Fremont plant by 400% in four years. The company expects the acquisition of Grohmann Engineering to accelerate this rate of growth.
The deal is expected to be finalized in early 2017, subject to regulatory approval, including in Germany.
Financial terms of the deal were also not disclosed.
Shares of Tesla Motors Inc are down more than 19%. The stock has lost 16.85% in the past 12 months.