Tesla buys Grohmann

Tesla Motors announced on Tuesday that it would buy Grohmann Engineering to improve its automated manufacturing systems. The deal, whose financial terms were not disclosed, is expected to add over 1,000 engineering and skilled technician jobs in Germany over the next two years.

According to the company's website, the German firm is a family-owned business run by founder and chief executive Klaus Grohmann. It is based in the German town of Prüm and employs around 700 people. It is regarded as one of the world's leading firms in highly-automated methods of manufacturing from which it garnered revenues of 123 million euros ($135 million) in 2015.

"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," the e-car manufacturer said in a statement.

Tesla plans to start building its mass market Model 3 electric car next year, and it wants to build 500,000 of these vehicles per year in 2018. More than 300,000 people have put down deposits to reserve a Model 3, which is expected to cost $35,000.

Tesla is seen struggling to master the technological challenges of mass-producing vehicles as it currently builds only about 80,000 to 90,000 units of its luxury Model S and Model X vehicles annually.

Following the transaction, Tesla expects "exponential improvements in the speed and quality of production, while substantially reducing the capital expenditures required per vehicle."

The deal, expected to close next year, is subject to clearance from regulators, including those in Germany.

uhe/sri (AFP, dpa, Reuters)