Like Amazon, Tesla started off by producing one innovative offering that addressed just a small portion of the total market it wanted to go after, and has gradually expanded its product line. And like Amazon, the company has absorbed substantial losses in the name of fleshing out its ambitious vision, and become a deeply polarizing subject among investors.
And just like Amazon, Tesla has long treated the infrastructure that enables its main offerings as a core competitive advantage, one that it's willing to invest heavily in to gain an edge on rivals. Tesla's battery-producing Gigafactory and supercharger network both serve as examples. So does, of course, the investments Tesla has made in creating highly-automated, robot-filled, production lines at both the Gigafactory and the company's giant Fremont, California car manufacturing plant.
On Tuesday, Tesla added to its automation investments by striking a deal to buy Grohmann Engineering, a 700-plus employee German firm proclaimed by the company to be "one of the world leaders in highly automated methods of manufacturing." Terms are undisclosed; the deal is expected to close in early 2017.
Tesla has already been working with Grohmann for over a year on projects related to its relatively low-cost Model 3 sedan, which the company plans to begin shipping in late 2017. "Several critical elements of Tesla's automated manufacturing systems" will be made at Grohmann's Prüm, Germany headquarters, according to the company.
In addition, Grohmann will underpin a Tesla Advanced Automation Germany unit to which the company plans to add over 1,000 "advanced engineering and skilled technician jobs" over the next two years. For reference, Tesla currently employs over 14,000 people.
The investments are meant to help Tesla up its car production to 500,000 vehicles in 2018, far above the company's forecast for 2016 deliveries of 79,000 (50,000 in the second half of the year). Musk claimed earlier this year that Tesla's Fremont plant could eventually produce a million cars per year.
Hitting that goal is going to require a lot more robots. The Fremont plant already has about 600 robots, including some of the largest ones used in manufacturing. Japan's Fanuc, which supplies many of the robots found at both the Fremont plant and the Gigafactory, says it's scrambling to meet Tesla's Model 3 needs.
But Tesla's automation efforts don't just involve scaling what it does now. During the company's second-quarter earnings call, Musk talked about automating tasks that are still fairly labor-intensive, and claimed Tesla's long-term goal is a factory in which workers aren't needed in the production process. "There's still a lot of people at the factory, but what they're doing is maintaining the machines, upgrading them, dealing with anomalies," he said.
Musk referred to such an ultra-automated environment as "Version 3" of Tesla's efforts to make its plant look like an "alien dreadnought." By contrast, Model 3 production is only referred to as "Version 0.5," even though large productivity improvements are promised relative to current levels due to further automation and greater economies of scale.
It looks as if Grohmann will play a big role in Tesla's efforts to get to Version 3, and some role in getting to Version 0.5. Tesla says it believes its new German unit, together with U.S. engineering teams, will deliver "exponential improvements in the speed and quality of production, while substantially reducing the capital expenditures required per vehicle."
The investments, it should be noted, comes at a time when Tesla is already set to spend heavily to hit its 2018 production goal. Though the company says its current financial plan doesn't require raising more money, it hasn't ruled out doing so, and many think a fresh capital raise is just a matter of time.
The Grohmann deal brings to mind Amazon's $775 million 2012 purchase of Kiva Systems, a maker of robots and related software that are used to move goods around warehouses. Since then, Amazon has leveraged Kiva's technology to deploy tens of thousands of robots within its fulfillment centers. The robots are widely seen as a competitive advantage, helping Amazon lower its labor costs, expand the breadth of its Prime two-day shipping service and rapidly grow its high-margin fulfillment services business for third-party merchants.
It remains to be seen if Grohmann will be the Tesla equivalent of Kiva. Given the company's history, any claims about "exponential" improvements in production speeds and quality need to be taken with a spoonful of salt. But it does look as if the company is ready to do whatever it takes to make Musk's alien dreadnought vision come true.