In a deal that could make the upwards of 400,000 people on the waitlist to buy a Model 3 very happy, electric car maker Tesla announced Tuesday that it is planning to acquire Grohmann Engineering in Prüm, Germany to help expand car production. Grohmann builds automated manufacturing plants for the car, semiconductor, electronics, and other industries.
The acquisition, the financial details of which aren't yet public, will establish a base for Tesla in a country often considered the world’s engineering capital, with other German locations to follow, says Tesla in an announcement. It also could help the company that is famous for missing its delivery goals meet an aggressive production schedule for its luxury cars – Model S and Model X – and the forthcoming, cheaper mass-market Model 3 car. The $35,000 Model 3 is due to begin production in mid 2017, with deliveries expected in 2018.
Building up the production capacity to meet the high demand for Tesla’s cars and batteries quickly and efficiently is considered crucial to making the automaker's products more affordable, and is a key to the company's long-term success. Tesla, founded and headed by entrepreneur Elon Musk, has said that it will boost annual car production 10-fold over the next couple of years, growing from 50,000 vehicles produced in 2015 to 500,000 in 2018.
“Combined with our California and Michigan engineering facilities, as well as other locations to follow, we believe the result will yield exponential improvements in the speed and quality of production, while substantially reducing the capital expenditures required per vehicle,” Tesla wrote in Tuesday’s Grohmann Engineering acquisition announcement.
The company said that it has already increased the production rate at its plant in Fremont, Calif. by 400 percent in four years, and will continue to grow it.
This is Tesla’s third known acquisition, as VentureBeat points out, though Mr. Musk called it the “first acquisition of significance in our whole history,” according to TechCrunch. In August, Tesla bought solar-panel maker SolarCity, and in 2015 a Michigan-based, car- parts manufacturer Riviera Tool. Tesla is waiting on approval from regulators to complete the Grohmann deal, which it expects to do in early 2017. The new company will be called Tesla Grohmann Automation.
Tesla also is building out its lithium-ion battery factory in Nevada, called the Gigafactory, which will be one of the world’s largest when it’s completed in 2018. That factory produces batteries for Tesla cars and for homes, where people could store unused renewable energy harnessed by rooftop solar panels.
“Tesla alone will require today’s entire worldwide production of lithium ion batteries," writes Tesla on its website. "The Tesla Gigafactory ... will supply enough batteries to support our projected vehicle demand.”
The company also is expanding its network of Superchargers, or Tesla car-charging stations that can power its cars by 80 percent – or about 170 miles, according to Forbes – in 30 minutes. There are 735 of these stations around the country today.
The Palo Alto, Calif. based car maker recently reported a $22 million profit for the third quarter of this year, its second profitable quarter in history, after 12 quarters of losses. Tesla launched in 2003.