Back to top

Stocks in the News

Ryan McQueeney

Here's Why Tesla Just Bought a German Engineering Firm

TSLA

Trades from $3

Electric car giant Tesla Motors (TSLA - Free Report) announced Tuesday that it has agreed to buy Grohmann Engineering, a German automated manufacturing specialist. The company will be renamed “Tesla Grohmann Automation” and should play an integral part in helping Tesla reach its increased production capacity goals.

Tesla and its often-enigmatic CEO, Elon Musk, have always been known for their lofty ambitions. The carmaker hopes to raise its global manufacturing capacity to 500,000 vehicles by 2018, a significant increase from this year’s expected output of 80,000 vehicles.

In order to reach this goal, Tesla is not only ramping up production at its main facility in Fremont, California, but also investing in foreign manufacturing, as today’s announcement implies.

In a blog post detailing the purchase, Tesla said that it expects the deal to close by early 2017, and, upon approval, its new operations in Germany will bring over 1,000 advanced engineering and skilled technician jobs to the country over the next two years.

Musk and his company need all the help that’s available to them as Tesla prepares to roll out its Model 3 vehicle in late 2017. The new sedan, which has a base price of about $35,000, is Tesla’s first foray into the affordable car market. Although pre-order numbers for the Model 3 appeared impressive, Tesla has said it will be unable to reach full production on the vehicle until 2018.

Furthermore, Tesla’s surprise acquisition of Grohmann Engineering comes in the middle of its proposed takeover of SolarCity . Tesla still needs to fund that $2.7 billion merger, as well as its uncompleted Gigafactory.

Stocks that Aren't in the News. Yet.

You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015 with a stellar average gain of +26% per year. See these high-potential stocks free >>

In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:

TESLA MOTORS (TSLA) - free report >>