Tesla is ramping up production by buying a German company

Lynsey Barber
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European production will take place in (Source: Getty)

Tesla has taken action to address its production problems (too much demand. not enough supply), snapping up a German manufacturer to help it build its electric cars.

Grohmann Engineering will help it hit a target of producing 500,000 cars a year by 2018, Elon Musk's company said today, and it will become Tesla Grohmann Automation.

Read more: Watch: Tesla's self-driving cars revealed in video shared by Elon Musk

The factory will build automated systems that will then be used in its car building factories with the goal of streamlining production and increasing efficiency.

It will also create 1,000 new jobs in Germany over the next two years and will pathe the way for further factories, revealing that other locations will follow.

It's the second location for Tesla outside the US and the fourth production site for the company after California and Michigan across the pond, and the Netherlands in Europe.

The firm said in blog post:

"Under the continued leadership of Mr Grohmann, several critical elements of Tesla’s automated manufacturing systems will be designed and produced in Prüm [Germany] bto help make our factories the most advanced in the world. Combined with our California and Michigan engineering facilities, as well as other locations to follow, we believe the result will yield exponential improvements in the speed and quality of production, while substantially reducing the capital expenditures required per vehicle."

Terms of the deal, expected to close in early 2017, have not been disclosed and the deal will face the scrutiny of regulators.

Tesla surprised Wall Street last month by posting its first profit in eight quarters after making a record number of car deliveries.

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