UK Edition
Electric car maker Tesla eyes UK base after making first European foray
Tesla plans to tap British automotive expertise by establishing a UK base, Elon Musk has said.
The billionaire boss of the electric car company announced the move as Tesla made its first major acquisition, buying German engineering business Grohmann as it prepares to automate its production.
“We have a lot of respect for the British automotive engineering talent,” the billionaire said. “Just look at Formula 1 - it amazes me how much British talent there is in that.
“We are likely to establish a Tesla engineering group in Britain at some point in the future.”
Detailing the company’s plans for expansion into Europe, Mr Musk said he “did not see” Brexit and the turmoil it is causing as being likely to have a “significant impact” on Tesla’s long-term aims of making electric cars affordable to more people.
“We want to change the world with a lot of electric cars for a lot of people. That is what buying Grohmann is about.”
He added that the forthcoming introduction of the Model 3 - the cheapest Tesla yet, and expected to cost about £30,000 when it goes on sale next year - was key to his dream of a world powered by renewable energy. However, the company needs to become more efficient at producing vehicles to achieve this.
The acquisition of Grohmann - a specialist in automation - will allow Tesla to speed up its car production, helping it hit its 2018 target of 500,000 vehicles rolling off the production line, five times the current level.
“This is about building the machine that builds the machine, which is more important than the [cars] themselves as volume increases,” the Tesla chief said.
“The only way to make a large factory to work is to have significant automation,” he added. “We will still have a large headcount but lots of automation and robotics.
“Automation is the way to make cars more affordable and accessible to as many people as possible. Economies of scale are the way to take the cost to something that people can afford to buy.”
Under its expansion plans, the company will look to establish car-making plants in Europe. Currently its vehicles are made at its factory in Fremont, California.
Tesla is also looking “seriously” for what Mr Musk called an “ideal location” in Europe for a second “gigafactory” - the company’s term for the giant plant in Nevada where it builds the batteries its cars use.
“Tesla is going to make some very significant investments in Europe - and the US of course,” Mr Musk said. “There is no question of at least one, maybe two or three gigafactory locations in Europe in the future.
“Currently Europe is a market for Tesla but we think it the right thing to do is to start producing cars there as soon as we can reasonably do.”
Building factories closer to end markets would also help reduce costs by cutting down shipping.
Professor David Bailey, an automotive industry expert at Aston university, said Tesla targeting UK expertise was a logical move.
“A British engineering base would make a lot of sense for Tesla,” he said. “The Midlands, for example, has what I call a ‘phoenix industry’ of cutting-edge firms working in low carbon and driverless automotive technologies, linked both to universities and the motorsport industry.
“Just as auto makers go to Silicon Valley to tap into software design, so too auto firms come to the UK for design and engineering skills and technology.”
The acquisition of Grohmann - the first significant purchase in Tesla’s history, and preceding the completion of a tie-up with Mr Musk's renewable power group Solar City - will see the company take on about 750 staff.
Mr Musk said the he expected the deal - which he declined to put a value on - to create a further 1,000 highly skilled jobs as Grohmann’s expertise is incorporated into Tesla’s manufacturing.
A fortnight ago Tesla posted its first quarterly profit in more than three years as it reported earnings of $22m for the three months to the end of September.
The move into the black - for only the second time ever - was driven by revenues rising 145pc to $2.3bn, as it delivered 24,821 vehicles.
Sales were dominated by the Model S, a sedan which sells for about £50,000 in the UK, with 16,047 models delivered. Deliveries of the Model X SUV - priced at about £75,000 - were 8,774 over the period.