What Does Tesla’s Latest Purchase Mean for Tesla?
Tesla Motors Inc (NASDAQ:TSLA) agreed to buy manufacturing-technology provider Grohmann Engineering GmbH as Tesla CEO Elon Musk attempts to ramp up Tesla’s production sixfold by 2018.
With the release of the “Model 3” fast approaching, it appears that Tesla is looking for ways to help push the moderately priced vehicle out the doors fast enough to keep up with demand. Priced at $35,000 before government incentives, the “Model S” is Tesla’s best chance in the near future to hit mass-market appeal. Between the lower price of the Model 3 (the Model S sedan starts at nearly double the price), and Elon Musk collecting the resources to manufacture the vehicle, Tesla is gearing up for this car to be the game changer they need. (Source: “Tesla to Buy German Manufacturing Specialist on Model 3 Push,” Bloomberg, November 8, 2016.)
Grohmann Engineering will become the basis of an automation division for Tesla. The company plans to add 1,000 employees to Grohmann’s current 700, it said in a statement. The purchase is slated to be completed by early 2017. Financial terms weren’t disclosed. (Source: “Tesla buys Germany’s Grohmann Engineering to help ramp up electric car production,” Reuters, November 8, 2016.)
What’s truly fascinating about the statement, at least in my mind, is some of the language they use to describe the factories and production cycles.
“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.” [Emphasis added.] (Source: “Formation of Tesla Advanced Automation Germany,” Tesla Motors Inc, November 8, 2016.)
If you’re more of the “too long; didn’t read” (TL;DR) type, the bold section gives you all you need to know: the factory itself seems to be a big focus of Elon Musk and Co. Which, of course, is nothing new for the company that’s constructing one of the largest buildings in human existence way out in the Arizona desert, which is meant to produce—when fully operational—more lithium-ion batteries for his cars than the world currently produces in total.
And “Gigafactory 1” is only the beginning, with the production of “Gigafactory 2” announced today to be completed in Europe. We’ll be following up with the Gigafactory story, so don’t stray too far from Profit Confidential for all your Elon Musk/Tesla/world domination news.