German location for Tesla's European Gigafactory?

Tesla CEO Elon Musk has hinted that the company's next Gigafactory production plant will be on the French-German border. 

Musk confirmed the plans for a European Gigafactory at a press conference in Germany in late 2016, after he announced Tesla's acquisition of Grohmann Engineering – a German automated production technology firm. Its next Gigafactory, however, is almost certain to be in Shanghai, pending talks with the local Government. A European gigafactory will arrive after this. 

Tesla’s buyout of Grohmann Engineering was aimed at accelerating its manufacturing technologies as it prepared to put the Model 3 sedan into production. The proposed site is on the German-French border, with a view to being near to the Benelux (Belgium, Netherlands, Luxembourg) countries. At the moment, however, Germany is "a leading choice" rather than a confirmed decision. 

In relation to a question about bringing production of Tesla models to Europe, Musk previously said: "This is something that we plan on exploring quite seriously with different locations for very large scale Tesla vehicles, and battery and powertrain production."

Tesla Grohmann Automation is based in Prüm, Germany – not far from Musk's proposed production location – and specialises in automated manufacturing technology. Upon its acquisition, Tesla said that the company should accelerate its production processes as “the factory becomes more of a product than the product itself”.

Tesla uses the Prüm centre as a hub for its factory developments, although no vehicles will be produced at the centre. According to Tesla upon Grohmann's acquisition, a total of 1,000 jobs will be created in Plüm within two years, with Tesla planning to expand the centre in the near future. The developments in robotic car production which come from Prüm will be used in Tesla’s existing factory in Fremont, California.

Read more about Tesla's Gigafactory here 

Tesla hopes that opening more factories – previously speculated to be in Asia and Europe following Tesla’s US-based manufacturing plants – will create greater economies of scale in its production process, which will ultimately drive vehicle prices down. Tesla's struggles to produce the Model 3 at the intended rate have been well documented, and most recently culminated in the construction of a third, temporary production line at its factory in Fremont, California. 

Tesla needs to create these economies of scale in order to produce more cars like the Model 3, Model Y and as-yet-unnamed Volkswagen Golf-sized hatchback, which will be its cheapest models, as well as its best-selling. The Tesla spokesman said that the automation that Grohmann deals with is “critical to reach those economies of scale”.

Grohmann, according to Bloomberg, also serves the telecommunication, consumer electronics and biotechnical industries, and has presence in multiple Asian markets, as well as Europe, Canada, North and Central America, South Africa and Australia. These areas of business will without doubt be of great interest to Tesla, as it seeks to expand its presence globally, as well as diversify its business.

Tesla would not disclose how much it paid to acquire Grohmann, and couldn't comment further on Musk's comments.

Also read: World will need ‘at least’ 10 more EV battery gigafactories by 2025

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