
Formation of Tesla Advanced Automation Germany - runesoerensen
https://www.tesla.com/blog/formation-of-tesla-advanced-automation-germany
======
flexie
Not only has Tesla created the greatest external challenge to the German auto
industry that I can think of. They also have the nerve to attack them in their
own backyard where they can take advantage of German suppliers etc. What will
be next? A Gigafactory in Europe?

This is great news for people who like tech but must be worrying for the
German automakers who have yet to come up with a trustworthy answer to Tesla.

I believe one of VW, Mercedes Benz and BMW will bankrupt in 5-10 years. None
of them have taken EV serious yet and I fear it's soon too late. The EVs that
they have come up with as answers to Tesla are almost cartoonish like
vehicles. Take a look at this Mercedes EQ:
[http://www.autoblog.com/2016/09/29/mercedes-benz-
generation-...](http://www.autoblog.com/2016/09/29/mercedes-benz-generation-
eq-concept-paris-official/)

Or this VW I.D.: [https://techcrunch.com/2016/09/28/meet-the-i-d-
volkswagens-f...](https://techcrunch.com/2016/09/28/meet-the-i-d-volkswagens-
first-purely-electric-car-on-track-for-2020/) Same blue lights. I bet they
will come with a space suit and a laser gun as well.

Both are still concept cars but they represent what they expect their EVs
should look like. Mind you that this is something they plan to market in 2020
so it will probably be 2021 or later. And their planned 2020 EVs are inferior
to Tesla model S, X and 3 in 2016/2017 in many ways, not just design wise. It
is as though they think only hipsters will drive EVs in any foreseeable
future.

So when in 2021 they realise that they underestimated that ordinary people
want an EV that looks no more spacey than a combustion engine car, but comes
with wireless upgrades, long range batteries, large trunk, fast acceleration,
high safety rating etc., they will have to wait another 3-4 years until they
have a real answer ready. By then, model 3 has been on the market for close to
a decade and even better Tesla models with better range, faster charging etc.
have been introduced. And the Tesla cars will have been trained with tens of
billions of miles of self driving by then. How are the Germans going to catch
up?

~~~
Tomte
At least VW and BMW have real, practical and selling EVs.

But those are huge companies. They cannot say "let's only sell EVs". They
can't even say "let's downplay gas-driven cars and emphasize EVs".

What do you want them to do? Fire 95% of employees and sell 1% of the cars
they are selling today?

Of course Tesla looks forward-looking. They are all-EV, they are fighting for
profitability, they don't have existing business to protect.

And protect you must your existing business. "Pivoting" is one of the
favourite words in VC and startup circles, but it's also fairy-land, not a
plausible economic decision in this situation.

~~~
metafunctor
The conventional wisdom is that you must cannibalize your existing business
yourself, otherwise someone else will.

Seems to me that VW and BMW are not really pushing for EVs as much as they
should – at least, I don't know anyone who is buying them instead of a VW or
BMW with an internal combustion engine. Then again, I live in Finland, where
nobody has an EV anyway.

~~~
jonknee
I live in Seattle and electric BMWs are everywhere thanks to BMW's own
ReachNow car sharing service:

[http://www.bmwcarsharing.com/](http://www.bmwcarsharing.com/)

Basically the cars are paid for by the minute and come with free street
parking. You can unlock/lock through the app or a smartcard. This feels like
BMW is trying to both figure out EVs _and_ a possible post car ownership
society.

Tesla will be similarly doomed when most people don't own their own cars
(Tesla's most valuable asset is its brand and that means nothing when you
aren't buying the car!).

~~~
baq
1\. Tesla is pivoting into an energy company that happens to make cars on the
side. If it doesn't die because Model 3 flops (not saying that it will or
won't, mind you) its future looks quite bright.

2\. Teslas driving around right now are doing what they call fleet learning
for self-driving purposes.

3\. Tesla is absolutely getting ready for post ownership era of motorization,
in fact the autopilot effort and announcements regarding for-profit car
sharing only being available through Tesla network directly confirm that.

~~~
toomuchtodo
> Tesla is absolutely getting ready for post ownership era of motorization, in
> fact the autopilot effort and announcements regarding for-profit car sharing
> only being available through Tesla network directly confirm that.

This is why I chuckle when everyone says "Look how few Tesla vehicles are
produced!". They don't have to replace every vehicle purchased, just the
vehicle miles driven. Cars sit idle 90-95% of the time, which means if you
increase utilization with the Tesla Network, they need only 20-30% of total
worldwide manufacturing capacity to replace all cars.

Total cars sold in the US this year? Just shy of 18 million. How many does
Tesla need to build to replace that capacity if they're self driving? 4-6
million cars/year to start, decreasing rapidly depending on rideshare uptake.
Easily doable with their automated manufacturing efforts.

Gonna be a bitch when Tesla manufacturing curve hits vehicle miles demand, and
existing automaker sales plummet.

~~~
badestrand
The idle time will not change by much anytime soon. Everyone commutes in the
same hours and at night all cars stand still. Yes, society becomes more
flexible and diverse but this is a very slow process.

~~~
Fricken
5:30 PM in Seattle on a weekday is peak traffic, 1 in 5 daily use vehicles are
on the road.

So in a hypothetical wherein Robotaxis have acheived full penetration, maybe
we'll need 1/3 of the vehicles we use today.

There would likely be a lot less steel in those vehicles as well, since they'd
largely be optimized for single commuters, and would need less of the
redundancies built into current cars for safety.

------
BenoitEssiambre
"As the machine that builds the machine, our factories are so important that
we believe they will ultimately deserve an order of magnitude more attention
in engineering than what they produce."

They shouldn't stop there. Any good software engineer knows that even more
attention should be paid to the abstract factory factories.

------
conflagration
This just made my jaw literally drop. Not only is Prüm my former hometown (of
roughly 5000 people), but I actually worked at Grohmann at holidays and as a
part-timer during my school and student days.

This place is filled with prototypical German engineers (in the good sense)
and the company was always in growth-mode. I think this might be a very good
acquisition for Tesla.

~~~
TulliusCicero
That seems like an awfully small town for what Tesla wants to use it for.
Won't they have trouble with recruiting?

~~~
masklinn
> That seems like an awfully small town for what Tesla wants to use it for.

They're buying an existing company which is HQ'd there.

> Won't they have trouble with recruiting?

Why would they? People can easily move around.

~~~
TulliusCicero
> They're buying an existing company which is HQ'd there.

I understand that, but it sounds like they are also planning to try and add a
lot of people in the future.

> Why would they? People can easily move around.

Perhaps in Germany the attitudes are different (I recently moved here so maybe
I'll find out!), but in the US you'd have an extremely hard time recruiting
talented engineers to a city of just 5,000 people. Most educated people in the
states want the amenities of a larger city.

~~~
pluma
The difference probably is that the scales are different in Germany. The
largest city in the general area is Cologne with 1 million residents. There
are a lot more much smaller towns in between and it's perfectly normal to
drive from one town to another for shopping and services because the towns
tend to be very close to each other.

You don't generally get these vast empty stretches of land between places in
Germany, especially not in the West (the most densely populated region of
Germany). But you also don't get American megacities like NYC, SF or LA.

~~~
XorNot
Also autobahns make a lot of distances seem very small in Germany.

~~~
pluma
Not really. An hour drive is still an hour drive. The physical distances don't
really matter much though if you don't happen to own a helicopter or it's
short enough that you can walk or ride a bicycle.

The autobahn is frequently overestimated by foreigners. That there is no speed
limit _in principle_ doesn't mean that you can go any speed in practice. Most
of the autobahn has speed limits and road works.

~~~
masklinn
> Not really. An hour drive is still an hour drive.

An hour drive is an hour drive, but 60 miles is an hour drive in the US, it
might be 30~45mn via the Autobahn or Schnellstraßen.

> s. That there is no speed limit in principle doesn't mean that you can go
> any speed in practice. Most of the autobahn has speed limits and road works.

Sure, but speed limits tend to be much higher than they are on US interstate.

~~~
dx034
In reality, few drivers on German roads go faster than 70-80mph. Mostly due to
traffic, but even with free flowing traffic the minority drives much faster.
It's nice to be able to drive fast if you have to, but a lot of people
(especially on the country side) are very environmentally conscious, which
doesn't go well with driving 120mph.

------
shade23
This move gives them access to much more than just Grohmann.

\- The infrastructure available in Europe and Germany is tailored towards
automobile manufacturing [1] -They have moved to the home turf of few of
biggest automobile manufacturers . -The amount of talent available to poach
would increase too.

I wonder how all the other German Automobile manufacturers look at this move.

[1]:[https://www.ixpos.de/IXPOS/Content/EN/Your-business-in-
germa...](https://www.ixpos.de/IXPOS/Content/EN/Your-business-in-
germany/_SharedDocs/Downloads/automotive-industry-in-germany.pdf?v=6)

~~~
lispm
> I wonder how all the other German Automobile manufacturers look at this
> move.

Tesla is buying a relatively small company with just 700 people.

That's a drop in the ocean of automotive/manufacturing employees in Germany.
The car companies have >750k employees and the suppliers another 300k
employees.

------
radva42
I am not very surprised by this news: german companies are very, very strong
in this field.

I worked a few years in a german research facility for production technology
and automation a few years ago and the stuff we were working on was impressive
... to say the least.

Very smart people and a lot a discipline => it's obviously paying off.

~~~
ff10
Then again, there's a general sentiment [here] that German carmakers will go
under facing the Tesla threat. The RDF is strong with Tesla. That's from
someone who's considering buying a Model 3 next year.

~~~
te_chris
General sentiment they'll go under? Come again?

~~~
ff10
I forgot to refer to what a lot of people in this thread are writing.

------
ptbello
Let the poaching begin. BMW, Porsche and friends will better come up with
solid retainers, lest lose their top talent.

~~~
lmedinas
They already have problems getting and retaining talent.

~~~
doczoidberg
don't forget that there are strong cooperations and they know their talents
better than outsiders. They know who is how much worth.

~~~
Matthias247
Not really. In the german automotive industry there are no real exceptional
salaries for engineers, it's pretty much regulated through IG Metall and
everybody is earning the same in a +-15% range. That means these companies
typically don't offer engineers awesome salaries in order to retain them,
doesn't matter how good they are at their stuff. The only exception is (non-
technical) management.

------
rattray
For those curious about Grohmann the company:

> Grohmann Engineering GmbH develops, supplies, and services production
> systems. Its products include assembly systems, placement machines,
> singulation machines, laser and bonding systems, test and thermal systems,
> liquid dispensing systems, product handling and tape application systems,
> flexfoil process equipment, fiber laying and coating systems, automated
> fiber-end finishing systems, terminal assembly systems, bonding and micro-
> molding systems, in-line assembly and molding systems, sealers, and machine
> platforms. The company serves automotive, telecommunications, consumer
> electronics, and biotechnical industries. Grohmann Engineering GmbH is based
> in Prüm, Germany. It has service and support centers in the Northern United
> States, Canada, China, Costa Rica, the Philippines, South Korea, Taiwan, the
> United Kingdom/Ireland, South America, Australia, Scandinavia, Malaysia, and
> South Africa.

from
[http://www.bloomberg.com/research/stocks/private/snapshot.as...](http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=25937502)

The company website is [http://www.grohmann-
engineering.de/](http://www.grohmann-engineering.de/)

------
sidcool
This is great news. Never ever before was I so interested in manufacturing
operations and logistics.

~~~
edpichler
Same as me, transportation and energy are really big problems today.

------
caminante
Grohmann makes plants for automated manufacturing and had FY15 revenues of
115M EUR.

Am I insufficiently caffeinated to see this as a big deal?

~~~
dave1619
Can you share link to their revenues?

------
jlj
Here's an analysis on the impacts that reduced car ownership and increased EV
market share will have on the transportation and energy industries. If this
comes true, Tesla, Uber, ReachNow, and company may do for those industries
what Amazon did (and is doing) for publishing and retail.

[http://markmancapital.net/blog/2016/10/27/auto-industry-
face...](http://markmancapital.net/blog/2016/10/27/auto-industry-faces-
existential-challenge)

"Morgan Stanley analysts think autonomy is the tipping point. “We believe
shared and autonomous cars can deflate the cost per mile to as little as 20
cents, triggering a doubling of global miles travelled by 2030,” Jonas says.

At that cost, it no longer makes sense for consumers to buy vehicles. So, auto
dealerships no longer make economic sense. The business-to-consumer auto
insurance model collapses, given diminished risk. Ride-hailing, especially for
groups, becomes cost competitive with short, regional air travel. Skippingthe
TSA lines is an added bonus. Public parking spaces become mostly obsolete,
yielding huge swaths of valuable urban real estate. And the economics of
electric vehicles for fleets hastens the migration away from fossil fuels,
leading to an energy glut and more heavily taxed electricity infrastructure."

------
andrewclunn
Worried that the EU is going to use regulatory measures to advantage their
home grown producers? Just make sure you provide some jobs and move part of
your business there. Or perhaps I'm just too cynical.

~~~
tormeh
There is some evidence for this, but honestly the US does the same, usually
worse. Better not speak of China, where this is official policy.

------
Ericson2314
If only programmers would invest as much in their own productivity... :/

~~~
kctess5
As to... buy a German engineering company?

~~~
Ericson2314
Mainstream programming languages and developer tools are a joke.

------
raverbashing
I suspect there will be some amount of culture clashing over such acquisitions

(Not as bad as the Japanese company that bought a French robot company I'm
sure)

~~~
pluma
If what I hear about working with American customers from people working in
manufacturing is any indicator, you might be right. But it shouldn't be much
of a problem for the product.

For context: anecdotally American customers tend to overspecify their
requirements with unrealistic and irrelevant details and then fail to follow
the same requirements on their end. Not much of a problem for German
manufacturers but certainly a bit of a culture clash initially. I bet
Americans have similar stories faulting the Germans in turn though.

------
tobltobs
Tesla and the coming EV wave will be a Tsunami for Europe. I don't see how the
European car industry will be able to manage this change. There are too many
investments and interests bound into combustion engines.

~~~
lttlrck
The same argument could apply to the US, even more so... the tsunami seems to
be more of a squall. The big manufacturers are adapting just fine at,
seemingly, their own pace.

~~~
tobltobs
> The same argument could apply to the US

No, the turnover generated by the automotive sector represents 6.5% of EU GDP,
in Germany it is 20%. In the US it is about 3%.

> The big manufacturers are adapting just fine

Any examples for that?

~~~
lispm
The German car manufacturers have a GDP share of 400 billion, out of a German
GDP of 3 trillion Euros.

~~~
tobltobs
automotive sector > car manufacturers

~~~
lispm
car manufacturers are also doing more than manufacturing cars.

Since we don't know what the numbers mentioned above mean and if they are
about comparable things, I tried to give a precise number for a sector.

------
sho_hn
"Real men own fabs."

~~~
tormeh
Context: Said by some AMD exec a year before they sold their fabs to GloFo.

~~~
sho_hn
GloFo was a spinout though, right?

~~~
tormeh
True.

