Musk Fired Founder of German Engineering Firm Vital to Model 3’s Launch, Sources Say

Tesla CEO Elon Musk reportedly fired its German engineering company’s founder last month after disputing over the firm’s business strategy.

According to two source familiar with the matter speaking with Reuters, Klaus Grohmann, founder and CEO of Grohmann Engineering, fought with Musk over keeping the firm’s legacy clients, which included Daimler and BMW. Musk wanted exclusive control over the firm that plays a vital role providing automation and engineering expertise as Tesla launches the Model 3 this year and aims for a 500,000 vehicle production target for next year.

The electric automaker wanted the founder to stay on, but a clash escalated with Musk over how to treat existing clients.

Grohmann declined to discuss his leaving the company, but did offer an interesting comment.

“I definitely did not depart because I had lost interest in working,” Grohmann told Reuters.

Asked about Grohmann’s departure, a Tesla spokesman praised the company he’d built and claimed it was a mutually agreed-upon decision.

“Part of Mr. Grohmann’s decision to work with Tesla was to prepare for his retirement and leave the company in capable hands for the future. Given the change in focus to Tesla projects, we mutually decided that it was the right time for the next generation of management to lead,” the spokesman said.

Two sources familiar with the matter said that the management layer at the firm, renamed Tesla Grohmann Automation, is continuing Grohmann’s work. The schedule to ramp up production is being met.

They did acknowledge that parts of the firm’s workforce has felt insecure about their future by being entirely dependent on Tesla after Grohmann’s departure.

About 660 of the firm’s workers are members of the IG Metall union that may initiate a strike. Tesla offered pay raises and job guarantees this week to bring down tensions and avoid a strike.

Tesla very much needs the workforce to stay in place, and had been counting on Grohmann to play a leadership role in the transition.

At the time of the acquisition last year, Tesla had said: “Under the continued leadership of Mr. Grohmann, several critical elements of Tesla’s automated manufacturing systems will be designed and produced in Pruem, to help make our factories the most advanced in the world………. At very high production volumes, the factory becomes more of a product than the product itself.”

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Before acquiring the firm in November, Tesla had started out as a client for the firm based in Pruem, Germany, near the Luxembourg border. The firm was known for helping corporate clients design modern automated factories.

Musk made the decision to buy Grohmann Engineering as pressure mounted to increase production volumes. It also made sense to the Tesla chief to make it the base for Tesla Advanced Automation.

The German firm has helped Tesla rivals Daimler and BMW build production plants for their electric car batteries.

Grohmann Engineering had also cultivated other major clients including auto parts suppler Bosch, Intel, and the Abbot Laboratories and Roche pharmaceutical companies.

Reuters


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