Elon Musk's insistence that Tesla Grohmann's resources be focused on the company's Fremont, California plant to ensure delivery of the Model 3 this summer.
Tesla continues to work on the issues cropping up at its Tesla Grohmann subsidiary in Germany, including how best to deal with the engineering unit’s non-Tesla customers, such as BMW, Volkswagen and Daimler.
How best to deal with these legacy customers is the root cause of the departure of the subsidiary’s former owner, Klaus Grohmann. Tesla acquired the former Grohmann Electronics late last year to help improve the California-based EV maker’s manufacturing operations.
Grohmann specializes in “building the machines that build the machines,” Tesla CEO Elon Musk noted at the time. The intention was to have Klaus Grohmann staying to help oversee the transition and direct the work done for Tesla’s Fremont, California plant.
However, not long after the deal was completed, Musk insisted that all of Tesla Grohmann’s resources be focused on the California plant to make sure the company’s first-ever mass market vehicle, the Model 3, makes its well-publicized production deadline of this summer.
(Musk predicts Tesla will build 100K vehicles in 2017. Click Here for the story.)
It’s also being counted on to move Tesla’s production rate from about 80,000 vehicles annually to 500,000 units by the end of 2018.
This shift in focus caused friction between Musk and Klaus Grohmann, who didn’t want to leave previous customers in the dark, with Grohmann leaving the company in March. Tesla officials have been talking with those companies in an effort to make the best of a bad situation.
“We have been in contact with every client for weeks on this issue and are on the way to finding individual solutions with each of them,” Tesla said in a statement on Thursday.
Before being bought by Tesla in November, Grohmann helped clients to build highly automated and efficient factories, including battery assembly lines for electric cars, according to Reuters. The discord that has followed has trickled down to the group’s 700 employees.
(Click Here to see what was behind Tesla’s bigger-than-expected Q1 losses.)
Musk flew to Germany recently to assuage the concerns of the employees about the shift in direction as well as to help avert a potential strike over wages and other benefits.
“We believe that Grohmann will honor its contractual obligations toward us in future,” BMW said in a statement on Thursday, adding that it had not been formally notified about any changes to the contractual arrangements, Reuters reported. Daimler and Volkswagen declined to comment.
The company just reported its first quarter earnings and despite record production and deliveries – and a surging stock price – Tesla managed to disappoint by reporting a bigger loss than analysts had been forecasting – though revenues for the first quarter of 2017 did manage to beat expectations.
The Silicon Valley battery-carmaker reported a loss of $1.33 a share, significantly worse than the 81 to 83-cent loss various tracking firms had Wall Street trackers predicting. The company has turned a quarterly profit – using non-standard accounting – only twice since it went public.
(Musk lays out plans for “Boring” company. Click Here to see how it plans to change the way we travel.)
The news wasn’t entirely disappointing. Tesla’s revenues for the January-through-March quarter came in at $2.70 billion, about $90 million above expectations. Production, the company said, was up by 64%, year-over-year. And Tesla previously had reported that it delivered 25,051 vehicles during the quarter, an all-time record, with a target of 50,000 battery-cars for the first half.