Tesla Model 3 update: Musk ousts Grohmann, keeps labour strike at bay with bonus and incentives

These are hard times for Tesla, and on top of that its top manufacturing executive has quit. Model 3 release is just months away, and this shake-up at the executive level was the last thing the company wanted. It puts launch of the laptop in jeopardy.

Executive Klaus Grohmann reportedly left the company last month after fallout with CEO Elon Musk over company strategy. One possible reason for this is that Tesla, shortly after acquiring Grohmann Engineering in November 2016 announced that it was not planning to renew any of the contracts with Grohmann’s existing clients. Some of these clients have had long working relationship with the Germany-based company. This greatly bothered the engineers at Grohmann, which ultimately prompted Musk to write a letter stating that Tesla shares may see a 10-fold increase over the next few years.

According to a trusted source, Tesla was planning to keep Grohmann on board and even he wanted to stay. However, Musk’s way of treating existing clients led to his departure. Grohmann could not agree with Musk’s demand to focus management attention only to Tesla projects, and ignoring the German-based company’s legacy clients that included BMW and Daimler. Musk primarily acquired Grohmann Engineering to improve automation and increase Tesla’s manufacturing process.

The company’s expertise is expected to help Tesla ramp up the Model 3 production, and also help meet the company’s ambitious goal of manufacturing 500,000 electric vehicles in 2018. Meanwhile, mass production of the highly-anticipate electric sedan is on track. Early reservation-holders are expecting deliveries by late 2017.

“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,” said a Tesla spokesperson, reports Forbes.

This is not the first time Tesla has dumped a manufacturing partner for not being able to meet Musk’s demanding performance expectations. After an Australian manufacturer couldn’t deliver Tesla Model X seats, Musk started to build those seats in-house. It even sued the company that manufactured the “falcon wing” doors. Tesla has also fired a German parts maker earlier this year as it wasn’t ready for the Model 3 launch. This time, in order to keep the labour force happy, Musk is handing out job guarantees, pay raises and stock options.

This has significantly reduced the prospects of any strike. Experts are however of the opinion that the clash with Grohmann is basically a culture clash. Musk’s brash and disruptor mentality clashed with Grohmann’s process-driven attitude. Musk is now in total charge though. While it is not unreasonable for Tesla to shift the focus to its Model 3 interest, it is a known fact by now that doing business with Musk is a draining experience. He expects the same level of enthusiasm and dedication from its partners, which is not possible all the time.

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