Tesla Grohmann CEO Ousted Due To Clash With Musk

Tesla Factory



Tesla acquired Grohmann Engineering to create Tesla Advanced Automation Germany (Image Credit: flickr via TC)

A longtime Grohmann engineering executive was forced out after he disagreed with CEO Elon Musk over the firms new strategy, following the recent acquisition.

Klaus Grohmann had different plans for his company, than that of Elon Musk’s future goals for Tesla Advanced Automation Germany. Now that Musk has taken the reins, expected changes are falling into place. We recently reported that Musk has cut the supplier’s affiliation with competing German automakers, and there was a possibility of a strike, which ended with the Silicon Valley electric automaker upping employees pay.

The acquisition of Grohmann was a key play in Tesla’s push to produce 500,000 vehicles per year by the close of 2018. Grohmann is a supplier of automated equipment that will help to make this goal a reality. Musk is a huge advocate for automation and often preaches about the “machine that builds the machine,” which is the direction that Tesla Advanced Automation Germany is set to take, as the automaker moves into the future.

Klaus Grohmann is the founder of the German engineering supplier that the Palo Alto automaker previously referred to as a:

“World leader in highly automated manufacturing”.

 “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.”

Musk had no intention to eliminate Klaus from the equation, and Klaus planned to remain involved, following the acquisition. However, sources with knowledge about the matter explained that he couldn’t agree with the fact that Musk wanted the firm to focus solely on Tesla, and cut ties with its long time customers; specifically German automakers Daimler and BMW. Grohmann also worked for Bosch, Intel, Roche, and Abbot Laboratories.

Reuters spoke with Klaus over the phone, but he would not divulge any specific information. He simply stated:

“I definitely did not depart because I had lost interest in working.”

Despite Klaus’ departure, the company is continuing forward momentum, and those in his management team are still on board with the new situation. Although some workers are a bit uneasy over dropping all customers, and only working for the California-based electric automaker. A Tesla spokesperson praised Klaus Grohmann, and said of the situation:

“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.”

Source: Reuters

Category: Tesla

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28 responses to "Tesla Grohmann CEO Ousted Due To Clash With Musk"
  1. Pushmi-Pullyu says:

    Shouldn’t be a surprise to anyone who has watched the history of how Elon Musk has run Tesla Motors. I am reminded of what Martin Eberhard called the “stealth bloodbath”, when Musk fired about 10% of Tesla employees after he maneuvered the board to oust Eberhard from the company.

    Maybe that’s what Tesla needed to be able to become a successful company (and maybe not), but it certainly didn’t do much for company morale at the time.

    Musk is definitely a “my way or the highway” kind of guy.

    1. AlanSqB says:

      Sometimes it’s much a much clearer picture from outside which leaders are killing the organization than it is from inside. When you complete an acquisition, there is a really small window of time to make big changes and be successful with them, even if they seem painful at the time.

    2. jelloslug says:

      So that was what, 20 or 30 people? Tesla was tiny at that time.

  2. AlanSqB says:

    1. Buy company
    2. Meet with exec team to share bold new vision.
    3. Meet next day with anyone who said “can’t” or “won’t” in the meeting to present them with their severance package.
    4. Profit.

    1. SparkEV says:

      Or 4. Crash and burn.

      When you buy a tech company, you’re primarily buying the group of people. Individually, they may be cheap (relatively speaking), but the group that produced the product/service is worth a lot of money. If you start dismantling that cohesive group, especially the top echelon, you’re essentially throwing away the company.

      For example, if IEV bosses decided to get rid of Jay after acquisition for disagreeing and Lovedays wanted to strike, but stayed due to more pay, I doubt the quality of IEV would be the same as it was before.

      We will see how this will turn out, but it’s not looking good.

      1. Vexar says:

        I agree with you, SparkEV. Grohmann was likely as important to his business as Elon is to his businesses. And yet, Paypal didn’t come unhinged all of the sudden!

        1. ¯\_(ツ)_/¯ sven says:

          What about Elon’s other business that he sold, Zip2? How’s Zip2 doing these days?

          1. Pushmi-Pullyu says:

            According to Wikipedia, Zip2 “was purchased to create a unit for Compaq’s AltaVista web search engine.”


            Of course, that was before better search engines like Google and Bing came along.

            1. Jason says:

              Ha,ha, does anyone​actually use Bing? First thing I change on a Windows PC.
              Alta Vista was a great search engine, but feel prey as many do, placing advertising and lots of muck on the main screen. Google has so far resisted that and remained a great, fast search engine.

  3. Alex says:

    I am not aware of any Audi or BMW entity doing work for Tesla. Why would anybody in clear mind expect Tesla entity to work for Audi or BMW?

    1. Mister G says:

      Exactly why would Tesla work for manufacturers of gas guzzling pollution machines?

    2. Pushmi-Pullyu says:

      Yes, I find it puzzling that anyone in the industry would think that after Tesla bought them out, Grohmann would continue to supply Tesla’s rivals.

      Seems rather clueless to me. If GM bought out a company which makes machines for auto assembly plants, would the CEO of that company expect to keep supplying Ford and Chrysler?

      Not to be unkind, but if Klaus Grohmann really thought that his company would be allowed to continue supplying Tesla’s rivals after acquisition, then perhaps it was time for him to retire.

  4. ¯\_(ツ)_/¯ sven says:

    “Now that Musk has taken the reins, expected changes are falling into place.”

    There are also unexpected changes taking place, which are a primary/significant reason for the clash between Grohmann and Musk. Musk is forcing Tesla Advanced Automation to stop working on current projects for other automakers and companies that are already in progress. Musk wants Tesla Advanced Automation to cancel these contracts, negotiate and pay a settlement for damages that result from breaching these contracts, and to devote 100% of its resources to Tesla projects. Mr. Grohmann wants Tesla Advanced Automation to honor these contracts and complete the projects that it started or is contractually obligated to perform.

    It’s quite understandable for Mr. Grohmann to not want to screw over his old customers whose repeat business helped make his company a success. Musk, on the other hand, has no such reservations.

    1. Someone out there says:

      One solution might be then that mr Grohmann starts up a new company to take over those contracts. Unfortunately there would be a delay while assembling a new team but it might be possible to do.

      I doubt any non-compete clauses would be relevant if Tesla Automation is 100% dedicated to Tesla, then there would be any competition for customers.

      1. Doggydogworld says:

        The relevant non-compete would be with Mr. Grohmann himself and a prohibition on him hiring any former Grohmann employees. Though he may have negotiated his way out of his personal non-compete in exchange for his silence.

        I hope Musk doesn’t plan any other acquisitions soon – he may encounter resistance 🙂

    2. Martin Winlow says:

      I don’t understand why this didn’t come out before the company was sold – surely Grohmann would have covered this? If not, it’s his fault entirely. Also, given the situation Tesla faces in the market at the moment, it would seem entirely reasonable that a Tesla company would not be interested in helping the competition and again, surely *this* issue would have come out in pre-purchase negotiations… All very odd!! So it sounds much more likely the 2 just really didn’t hit it off – a personality clash.

      1. Terawatt says:

        You’re turning it on its head. Surely Tesla should have covered it upfront if it planned to deliberately break the contracts/promises it had made to others. This isn’t normal business behavior, nor one that should be legal!

        Musk is playing with fire here. Maybe a huge valuation on the stock market makes his company irresistible, but if I ran a business, I’d think twice or thrice about entering into any contact with a company that clearly thinks it smart to abandon contacts for tactical reasons if it seems advantageous. Trust is important. You don’t get it by disregarding what you’ve promised, in contract form no less.

        If this had been a row about whether to continue entering into new contacts with old clients, Grohmann would have been wrong. The new owner has every right to change that, for whatever reasons. But he was told to break the contracts already in place. Basically he had to leave if he were to retain any mail integrity, a concept that maybe isn’t familiar to American corporations who view litigation simply as a part of the normal game. In Europe, in most industries, courts getting involved is associated with criminal behavior.

    3. Pushmi-Pullyu says:

      Why in the world would anyone believe any of Sven’s Tesla-bashing fake news?

      As a reminder, Sven continued to spread the smear campaign about accidents supposedly caused by a flaw in Model S suspension; a flaw which the smear campaign claimed Tesla was deliberately hiding.

      Sven continued to spread the smear campaign even after it became clear that it was based on fabricated evidence which was rejected by the NHTSA; evidence from some apparently deranged person who had an axe to grind against Elon Musk; a person who also claimed the videos showing SpaceX booster rockets landing on their tails were faked.

      Claiming that Tesla is actually breaking existing Grohmann contracts, rather than merely not renewing them, looks very much like another smear campaign to me. At the very least, I certainly wouldn’t take the word of a serial liar like Sven regarding anything about Tesla.

      If there is any truth to this, then let’s see the source. Let’s see if it’s a credible source, or more likely, a post from one of the many serial anti-Tesla FUDsters and TSLA short-sellers on Seeking Alpha.

      1. G2 says:

        Who is ‘Sven’? ?

  5. Someone out there says:

    I guess he can start up a new automation company then and get back his old customers.

  6. ffbj says:

    Sour grapes. Under him the people where being paid 25% less than their counterparts, So now they get more.
    I see his point in not just cutting all the other contracts loose. Does not seem like the best solution.
    Though he is now out, and has no say in the way things go now.
    When you buy something, it’s yours, and you can do what you want with it.

  7. AlphaEdge says:

    He’s 79!!! Elon did him a favor.

    I agree with his loyalty to his former clients, but if that was important to him, he should never have sold the company to Tesla.

    It’s Elon’s company now and of course it makes no sense to have your competitors as customers in this area.

  8. Mister G says:

    BYE BYE MR. GROHMANN…anybody else want to be retired? GO TESLA GO

  9. Bob Nan says:

    Sorry Mr. Grohmann.

    You cannot be loyal to an electric vehicle company like Tesla and a petro vehicle company like Daimler at the same time.

    Here are the differences between the 2 companies.
    1. Only Electric Vehicle manufacturing.

    The priorities of Daimler are in this order.
    1. Diesel (For 4, 6, 10, 14 & 18 wheelers).
    2. Petrol/Gasoline (Light vehicles like Cars, Vans, SUVs & Crossovers).
    3. Plugins (with very little range).
    4. Electrics (Just 1 B Class and Smart-EV for now).

    I wish you get a better job in some other company. Good luck.

    1. Terawatt says:

      Irrelevant. Grohmann had, and Tesla therefore now has, valid contracts with the companies. Of course they are free to not enter new contacts with these old clients. But to simply not do what they’ve promised is borderline criminal, and certainly immoral. Contracts are supposed to be trustworthy and enforceable.

      Potential suppliers and other partners to Tesla will take note. And the big boys could pull similar moves back at Tesla.

      What would you think of it if Daimler bought Panasonic and instructed management to not fulfill existing contracts with Tesla? Is that kosher? An acceptable way to do business that will foster the kind of competition that’s best for consumers/society at large?

      I am abhorred. Tesla is supposed to be the good guy. Doing stuff like this is never worth it.

      1. Pushmi-Pullyu says:

        Terawatt said:

        “But to simply not do what they’ve promised is borderline criminal, and certainly immoral. Contracts are supposed to be trustworthy and enforceable.”

        Yes, so why would you take the word of anti-Tesla FUDster Sven that Tesla is breaking the law by breaking valid contracts?

        A bit naive of you to believe SVen’s fake news, innit?

        “I am abhorred.”

        Perhaps you are regarded with disgust and hatred, but I rather doubt that’s what you meant to write. 😉

  10. TheRealTesla says:

    Musk previously said the new outfit would honor contracts already entered into by Grohmann Engineering. But a recent report from German-language news outlet Südwestrundfunk indicated that the group was in the process of ending all relationships with outside clients, including canceling existing orders.

    Der Maschinenbauer Tesla Grohmann in Prüm in der Eifel trennt sich von allen Kunden. Ab sofort wird nur noch für die Amerikaner produziert. Die Mitarbeiter sind verunsichert.


    Sofort actually means immediately not “fron now on” as Googletranslate give it. “(Work) will immediately onbe be produced for the American”.

    Not so difficult to check.

  11. Nix says:

    “Klaus Grohmann had different plans for his company”.

    HIS company? It isn’t “his” company. He sold it. It isn’t “his” anymore.