Cars and Drivers

Tesla Acquires German Firm in Bid for High-Volume Manufacturing

Paul Ausick

Published: November 8, 2016 9:15 am

Last Updated: January 13, 2020 1:20 am

The ink on the acquisition of SolarCity Corp. (NASDAQ: SCTY) isn’t even dry yet and Tesla Motors Inc. (NASDAQ: TSLA) has announced another acquisition. This one is a German company, Grohmann Engineering, a firm specializing in highly automated manufacturing methods.

Tesla did not reveal the price, but did say that the acquisition is contingent on regulatory approval, including in Germany, and that the electric carmaker hopes to have approval early next year.

Tesla recently boosted its production target to 500,000 units annually by 2018, an increase of practically an order of magnitude compared with expected 2016 production. Tesla expects great things from the deal:

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 also noted it has already increased its manufacturing capacity by 400% in the past four years and that the acquisition of Grohmann will “yield exponential improvements in the speed and quality of production, while substantially reducing the capital expenditures required per vehicle.”

And while investors are not ecstatic with the acquisition, neither are they fleeing the stock. Tesla’s shares traded up about 0.1% early Tuesday morning, at $193.39 in a 52-week range of $141.05 to $269.34. The consensus 12-month price target on the stock is $231.79.