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> Grohmann disagreed with Musk's demands to focus management attention on Tesla projects to the detriment of Grohmann Engineering's legacy clients, which includ

> Grohmann disagreed with Musk's demands to focus management attention on Tesla projects to the detriment of Grohmann Engineering's legacy clients, which included Tesla's direct German-based rivals Daimler (DAIGn.DE) and BMW (BMWG.DE), two sources familiar with the matter said. I mean, how was this not brought up and made a settled point before Tesla acquired his company? Big fan of Musk but this is on his shoulders. According to reports, Telsa is already talking to other Grohmann customers, read their competitors, on how to compensate them for breaking the contracts. Now they are facing the same engineers they just acquired wanting to go on strike. I'd start to worry about how Tesla is going to fund Model 3 manufacturing, buying out competitors from contracts that they don't want to fill, and how to deal with a set of key employees who may want to unionize and certainly want higher pay, but Tesla just somehow always seems to find a way. The stock is close to its all time highs, and short interest is at the bottom of its trailing year, so I guess I'm not the only one who has just thrown up their hands and just let Elon have his way. At what point does shorting Telsa join "starting a land war in Asia" as a rule to live by:) From Zero Hedge.... > The German labor union IG Metall has demanded that Tesla's management formalize multi-year job guarantees and increase salaries as a way to provide assurance amid management turmoil. The alternative is a strike which could lead to further "unexpected" delays for the Model 3, and even more hyperbolic statements from Musk on his twitter account to deflect attention from increasingly growing problems in Tesla's paradise.

EthanHeilman 10y ago
This shows that Tesla is focused on getting the Model 3 produced above all over considerations. They are playing to win not playing it safe.
colechristensen 10y ago
All of these events seem predictable and even desirable. Part of the benefit of acquiring Grohmann Engineering is depriving competitors of their services, and the costs include buying out contracts and appeasing labor. Turnover at an acquired company isn't unusual, nor is friction in the transition.
- NathanKP 10y ago
  If Tesla was smart and gave these aquihired employees adequate golden handcuffs and noncompete clauses then I agree. But if they didn't and key employees just leave and use their expertise to start another company that helps out the competitors again then Tesla will have played themselves.
  - wand3r 10y ago
    It could go poorly. Those are good points. It was a decent but if they retain talent and deprive competitors. Takes a long time to start a company and Tesla is likely attractive place for engineers so they will prob retain employees and IP to make it palatable if not profitable
  - gumby 10y ago
    > If Tesla was smart and gave these aquihired employees adequate golden handcuffs and noncompete clauses... BTW noncompetes are illegal in California where Tesla is based.
    - dangrossman 10y ago
      California law is not relevant to employees living and working in Germany.
      - jansan 10y ago
        AFAIK in Germany con-competition agreements are possible with the maximum term of two years.
    - sacheendra 10y ago
      Grohmann Engineering is a German company. Can someone chime in on the legality of non-competes in Germany?
      - jakewins 10y ago
        Totally legal, as long as the employee is paid at least 50% of their salary after they leave for the full duration of the non-compete period. http://www.lexology.com/library/detail.aspx?g=2bae173f-7fe4-47ba-8dfb-30a1ba642fb2 http://www.lexology.com/library/detail.aspx?g=2bae173f-7fe4-...
achamayou 10y ago
Maybe it was brought up and discussed, but what's happening now wasn't what was agreed at the time? Who knows.
wand3r 10y ago
This is a common occurrence in business even if ugly. Similar circumstances happened to Tesla with Mobile Eye and Google, FB, Microsoft do this regularly. Potentially it did come up and he was mislead to make the sale, maybe their strategy changed or something in between. I mean, Tesla was started as AC Propolsion and the CEO was fired, although fairly different circumstances. Either way, when you sell you sell control.
- FullyFunctional 10y ago
  Kindly fact check; when Tesla started, they bought technology from AC Propulsion, but it was analogue and for various reasons they ended up having to reimplement everything themselves from scratch. AC Propulsion is still around AFAIK.
  - wand3r 10y ago
    Yep, faulty memory. Still similar point though: Elon Musk bought in to Tesla and fired one of the founders. Obv, a Lotus Chassis and a car kit is much different than the product now but once you sell, you give up control. AC prop still exists. You were correct
lacker 10y ago
I mean, how was this not brought up and made a settled point before Tesla acquired his company? Probably something like, "The plan is X but of course the details aren't set in stone, we're a fast-moving company so we'll revisit our roadmap every so often." And then down the road Elon wants to do something that Grohmann strongly disagrees with, and the only plausible resolution is to fire Grohmann. This doesn't seem too surprising to me. Tesla bought this company to make Teslas. Why should Tesla spend any effort at all helping BMW and Daimler make cars? Maybe there's some rationale there but it doesn't surprise me that it is low priority.
mathperson 10y ago
I'm not saying they aren't reliable in this instance but I encourage you to be VERY skeptical of zero hedge..

EthanHeilman 10y ago

This shows that Tesla is focused on getting the Model 3 produced above all over considerations. They are playing to win not playing it safe.

colechristensen 10y ago

All of these events seem predictable and even desirable. Part of the benefit of acquiring Grohmann Engineering is depriving competitors of their services, and the costs include buying out contracts and appeasing labor. Turnover at an acquired company isn't unusual, nor is friction in the transition.

NathanKP 10y ago
If Tesla was smart and gave these aquihired employees adequate golden handcuffs and noncompete clauses then I agree. But if they didn't and key employees just leave and use their expertise to start another company that helps out the competitors again then Tesla will have played themselves.
- wand3r 10y ago
  It could go poorly. Those are good points. It was a decent but if they retain talent and deprive competitors. Takes a long time to start a company and Tesla is likely attractive place for engineers so they will prob retain employees and IP to make it palatable if not profitable
- gumby 10y ago
  > If Tesla was smart and gave these aquihired employees adequate golden handcuffs and noncompete clauses... BTW noncompetes are illegal in California where Tesla is based.
  - dangrossman 10y ago
    California law is not relevant to employees living and working in Germany.
    - jansan 10y ago
      AFAIK in Germany con-competition agreements are possible with the maximum term of two years.
  - sacheendra 10y ago
    Grohmann Engineering is a German company. Can someone chime in on the legality of non-competes in Germany?
    - jakewins 10y ago
      Totally legal, as long as the employee is paid at least 50% of their salary after they leave for the full duration of the non-compete period. http://www.lexology.com/library/detail.aspx?g=2bae173f-7fe4-47ba-8dfb-30a1ba642fb2 http://www.lexology.com/library/detail.aspx?g=2bae173f-7fe4-...

achamayou 10y ago

Maybe it was brought up and discussed, but what's happening now wasn't what was agreed at the time? Who knows.

wand3r 10y ago

This is a common occurrence in business even if ugly. Similar circumstances happened to Tesla with Mobile Eye and Google, FB, Microsoft do this regularly. Potentially it did come up and he was mislead to make the sale, maybe their strategy changed or something in between. I mean, Tesla was started as AC Propolsion and the CEO was fired, although fairly different circumstances. Either way, when you sell you sell control.

FullyFunctional 10y ago
Kindly fact check; when Tesla started, they bought technology from AC Propulsion, but it was analogue and for various reasons they ended up having to reimplement everything themselves from scratch. AC Propulsion is still around AFAIK.
- wand3r 10y ago
  Yep, faulty memory. Still similar point though: Elon Musk bought in to Tesla and fired one of the founders. Obv, a Lotus Chassis and a car kit is much different than the product now but once you sell, you give up control. AC prop still exists. You were correct

lacker 10y ago

I mean, how was this not brought up and made a settled point before Tesla acquired his company? Probably something like, "The plan is X but of course the details aren't set in stone, we're a fast-moving company so we'll revisit our roadmap every so often." And then down the road Elon wants to do something that Grohmann strongly disagrees with, and the only plausible resolution is to fire Grohmann. This doesn't seem too surprising to me. Tesla bought this company to make Teslas. Why should Tesla spend any effort at all helping BMW and Daimler make cars? Maybe there's some rationale there but it doesn't surprise me that it is low priority.

mathperson 10y ago

I'm not saying they aren't reliable in this instance but I encourage you to be VERY skeptical of zero hedge..