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Tesla Adds Germany's Grohmann Engineering to Speed Up Production of Model 3

Roaring car sales have fueled M&A, with Crestview, Grakon, Take 5 Oil and Watermill among the buyers

Tesla Motors Inc. (Nasdaq: TSLA) agreed to buy German manufacturing-technology provider Grohmann Engineering GmbH as the U.S. maker of electric cars prepares to roll out its first mass-market model.

The equipment maker, led by founder and Chief Executive Officer Klaus Grohmann, will become the basis of an automation division Tesla is setting up in Germany that will create about 1,000 jobs, the Palo Alto, California-based company said Tuesday in a statement. Tesla plans to complete the purchase by early 2017. Financial terms weren’t disclosed.

“Several critical elements of Tesla’s automated manufacturing systems will be designed and produced” at Grohmann’s headquarters plant in the town of Pruem, Tesla said. “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 plans late next year to begin selling the Model 3, priced at $35,000 before government incentives, and is seeking to boost production capacity by 10 times from 2015 levels to 500,000 vehicles a year by 2018. The vehicle will be built at Tesla’s plant in Fremont, California, where it also makes the Model S sedan, which starts at $66,000, and the Model X sport utility vehicle.

The takeover of the German factory-equipment maker, which will be renamed Tesla Grohmann Automation, will enable the Fremont plant to accelerate its production rate further after a fivefold increase in the past four years, the U.S. company said.

Automotive and products necessary to the sector have made for a busy industry this year. Recent deals include: Crestview Partners’ agreement to purchase Accuride Corp. (NYSE: ACW), a parts supplier for wheel manufacturers, for $124 million; Grakon LLC’s acquisition of Hamsar Diversco Inc., a maker of lighting and electronics for automobile manufacturers; Watermill Group’s purchase of parts supplier Experi-Metal Inc; and Trivest Partners' sell of Take 5 Oil Change Inc. to Driven Brands, backed by Roark Capital.

Additional reporting by Kamaron Leach, Mergers & Acquisitions

 

 

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