Tesla announces new gigafactory in European expansion

Tesla is making a “significant investment” in expanding its European operations, its CEO, Elon Musk, told investors on Tuesday, announcing a new “gigafactory” battery production plant and an automated manufacturing research centre.

The expansion follows the purchase of German firm Grohmann Engineering, which will be renamed Tesla Grohmann Automation. The company specialises in automated assembly systems serving the automotive, telecommunications, consumer electronics and biotechnology industries.

The deal, whose financial terms were not disclosed, is expected to add more than 1,000 engineering and skilled technician jobs in Germany over the next two years, subject to purchase approval by Germany, Tesla said in a blogpost. Grohmann employs about 700 people and had revenues of €123m (£109m) in 2015.

Tesla’s main base of operations and factory are situated in California, with a battery production plant called the Gigafactory being built near Reno in Nevada.

The company also has various showrooms around the world, with its European headquarters in Amsterdam and a distribution centre in Tilburg in the Netherlands, and Grohmann will serve as Tesla’s initial headquarters for the company’s new, Advanced Automation Germany arm.

Tesla has not yet confirmed the timescale for building Gigafactory 2 in Europe, with Musk adding that Tesla would do so after production of the Model 3 was under way. Tesla could eventually have as many as three vehicle and battery factory locations in Europe, he said.

The plant would be used for vehicle production as well as battery manufacture, Musk said, as the company tries to reorganise and improve its automated production line. Grohmann’s technology is expected to help Tesla ramp up production volume and quality, while cutting costs, as it attempts to produce 500,000 of its electric vehicles a year by 2018. Tesla hopes to build between 80,000 and 90,000 vehicles in 2016, with 50,000 being produced in the second half of the year.

Tesla took approximately 370,000 pre-orders of its more affordable Model 3, which will sell for about $35,000 (£28,263) and is expected to start being delivered in 2017 with full production in 2018.

Germany has been racked by angst in recent months over its hi-tech firms being snapped up by foreign buyers, blocking two high-profile deals after failing to hold up the sale of industrial robotics firm Kuka.

So far, Berlin’s fears have been directed at China, whose firms spent €11bn on German takeovers between January and October, according to consultancy EY.

Tesla also announced that it plans to start charging for the use of its Superchargers for vehicles ordered after 1 January 2017, which provide owners of new cars with 400kWh of power. This is enough to power them for around 1,000 miles a year, with the firm charging a “small fee” for battery top-ups above that allowance.

Until now, mid and high-capacity models of the company’s Model S and Model X cars have come with free access to Tesla’s network of Superchargers, which are capable of putting a half-charge into a car’s batteries within 30 minutes.

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