Tesla Buys Germany's Grohmann Engineering to Help Ramp Up Electric Car Production

Electric carmaker Tesla Motors Inc has agreed to buy Germany's Grohmann Engineering GmbH, which develops automated manufacturing systems for batteries and fuel cells, as the California-based company seeks to expand its production more than sixfold by 2018.

Unlisted Grohmann Engineering, based in Pruem, Germany, helped Tesla rivals Daimler and BMW build production facilities for electric car batteries.

Tesla is seeking to raise its global manufacturing capacity to 500,000 vehicles in 2018 from an expected production rate of about 80,000 this year. Its main production facility is in Fremont, California.

"To date, we have increased the production rate at our Fremont Factory by 400 percent in four years, and we expect this acquisition to accelerate that growth rate," Tesla said in a blog post.

Following the acquisition, which still needs to be approved by the cartel authorities in Germany, several elements of Tesla's automated manufacturing systems will be designed and produced in Pruem, close to Germany's border with the Netherlands and Luxembourg.

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 Tesla said in its blog. Grohmann currently has around 700 employees.

Tesla agreed on Sunday to buy a 74.9 percent stake from company founder and majority owner Klaus Grohmann, and a further 25.1 percent stake belonging to private equity firm Deutsche Beteiligungs AG (DBAG), DBAG said in a statement on Tuesday.

DBAG said it expected to earn in the mid single-digit million euro range by selling its stake in Grohmann and that Grohmann had revenues of EUR 123 million ($136 million or orughly Rs. 923 crores) in 2015.

DBAG said Grohmann had developed production lines for battery cells and batteries for "numerous" German and international automobile manufacturers. Grohmann was also specialised in the industrial production of fuel cells, DBAG said, and was active in the electronic and semiconductor industries as well as the biotechnology and medical technology sectors.

Grohmann Engineering will be renamed Tesla Grohmann Automation after the deal and will serve as the initial base for Tesla Advanced Automation Germany with other locations to follow, Tesla said.

The deal is expected to close next year.

© Thomson Reuters 2016