![]() ![]() Now Tesla is reportedly adding another similar company as a subsidiary as it plans to deploy its own battery cell manufacturing capacity. Over the last few years, Tesla has been on a buying spree of companies involved in manufacturing engineering and building machines for manufacturing, like Hibar Systems and Compass Automation. It is likely that we will see more investment and/or acquisition activity from Tesla in the automation space, as it searches for every possible factory improvement throughout its supply chain.Tesla is acquiring a German battery assembly line manufacturer supplying BMW and Mercedes-Benz, according to several reports. In short, with a costly capital structure, the company needs to sell a large number of cars to spread the costs of that capital structure accordingly. Since the adoption of electric cars has been hindered in one respect by their greater expense, Tesla has realized that reducing the upfront purchase expense is a critical determinant of market adoption and ultimately company profitability. Most notably, Tesla is quickly building its mammoth 'Gigafactory' outside Sparks, Nevada, and is expected to partially begin production of batteries soon, with full capacity expected by 2018. In fact, Tesla's approach is that its factories "ultimately deserve an order of magnitude more attention in engineering than what they produce." Terms of the deal were not disclosed by the companies, but it appears that CEO Grohmann will continue to play a significant role in the acquired entity, and perhaps in Tesla's manufacturing automation efforts more broadly.Īuto manufacturing is a highly capital intensive business, and the acquisition seeks to maximize automation capabilities for the firm's factories, reducing capital expenditures and freeing up scarce financial resources for R&D. So, the acquisition promises to help increase top-line revenues while reducing CapEx. The increased output will not only speed production but also reduce capital expenditures required on a per-vehicle basis. Tesla has a daunting task to quickly ramp up production of its fast-selling Model 3 electric car, which reached the 373,000 reservation mark in April 2016.Īlthough the company says it has increased its Fremont, California, factory output by 400% in four years, it needs to greatly accelerate that output growth and expects the Grohmann acquisition to help in that regard. Tesla intends to acquire Grohmann as the initial base for its in-house automation, now called Tesla Advanced Automation Germany. Grohmann has 704 employees, and as of December 31, 2014, had 95.1 million euros in annual sales. ![]() and Shanghai, China, and provides manufacturing assembly machines for battery and electronics production. The company has offices located in the U.S. Prum, Germany-based Grohmann was founded in 1963 and is headed by Klaus Grohmann as CEO and Karl Reiker as CFO. The acquisition will assist Tesla in automating its factory production processes, increasing output rates and decreasing capital expenditures per vehicle.Īssuming significant output gains can be made as a result of the deal, I view it as a net positive for Tesla's outlook. Electric car manufacturer Tesla Motors ( NASDAQ: TSLA) has announced an agreement to acquire Grohmann Engineering.
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