Tesla (NASDAQ: TSLA) has agreed to acquire Grohmann Engineering, buying a 75% stake from company management and a 25% interest from German private equity firm Deutsche Beteiligungs to formally expand the automaker's operations into Europe for the first time in its brief history. Grohmann is much more established: Founded in 1963, the company has a track record of working with European automakers like Daimler (FRA: DAI) and BMW (FRA: BMW). The company will be known as Tesla Grohmann Automation upon completion of the deal, expected sometime next year.
Of late, the company has turned its attention toward building facilities to make parts for electric car batteries—experience that will surely come in handy as Tesla sets out to produce more than 500,000 electric cars by 2018. In fact, the two companies had reportedly engaged in a trial partnership before agreeing to a sale. The deal will shift some of Tesla's automated manufacturing systems to Prüm, Germany, adding an estimated 1,000 jobs over the next two years to Grohmann’s current count of 700 employees.
The sale marks the end of an era for DBAG. The firm's predecessors had backed Grohmann for three decades, and DBAG itself first acquired a stake in the business in 1996.
The deal also represents Tesla’s first attempt to use a strategic acquisition in order to scale up production as it looks to push the Model 3 (and its $35,000 price tag) into the mainstream. Although the full details weren't disclosed, Tesla founder and CEO Elon Musk called it “a major investment” in the creation of Tesla Advanced Automation.
“We want to make Germany, essentially, a part of Tesla,” Musk told reporters. “This represents a significant endorsement of German technology.”
The market responded well to the news, with shares of Tesla closing up just under 1% at $194.94 apiece.