Tesla’s recent purchase of German manufacturing automation specialist Grohmann Engineering comes as an increasing number of Gigafactory rivals spring up across Europe.

Tesla announced the Grohmann deal last month after Swedish media reported that its former supply chain vice president, Peter Carlsson, was planning to open a battery gigafactory of his own in Sweden.

The announcement means at least five gigafactories are now slated for the continent. Tesla itself is planning a European gigafactory in the wake of the Grohmann acquisition. The facility will be used to build batteries and cars.  

Meanwhile BMZ opened the first phase of a German battery manufacturing facility in May. LG Chem has unveiled plans for a factory in Poland, potentially opening next year. And Samsung SDI wants to manufacture up to 2.5 gigawatt-hours of batteries in Hungary from 2018.

Carlsson’s venture, SGF Energy, has received little publicity outside his native Sweden, although investors got an update on plans last month at The Business Booster, an event for European energy startups.

SGF Energy has submitted a feasibility study for the plant, which could produce up to 35 gigawatt-hours of batteries a year, to a Swedish government agency in charge of state funding for research and development.

It is understood the company is keen to use Sweden as a base because of the availability of cheap hydropower and raw materials. Finland boasts lithium, nickel and cobalt reserves, while Sweden offers graphite, nickel and manganese. 

Carlsson revealed construction of the €4 billion (USD $4.2 million) SGF Energy factory could begin in 2018, with potential customers ranging from utilities such as E.ON and Vattenfall, to car companies such as Nissan or Volkswagen.

Above all, though, the trend toward gigafactories in Europe is about “meeting the need for the electrification of transport,” said Dr. Arshad Saleem, smart grids and energy storage technology expert at InnoEnergy, which organizes The Business Booster. 

The battery manufacturing capacity growth expected for Europe means Tesla will be operating in an increasingly competitive market by the time its European factory opens. The Grohmann acquisition is seen as being a key part of its competitive strategy. 

“Led by founder and CEO Klaus Grohmann, Grohmann Engineering is one of the world leaders in highly automated methods of manufacturing,” said Tesla in a blog post. “This transaction will bring Mr. Grohmann’s leadership, a world-class team and unique expertise in-house.

“Moreover, it will serve as the initial base for Tesla Advanced Automation Germany headquarters, with other locations to follow. We expect to add over 1,000 advanced engineering and skilled technician jobs in Germany over the next two years.” 

Tesla declined to offer further details on the deal, beyond the contents of its blog entry. But Brett Simon, energy storage analyst with GTM Research, said the purchase was highly significant. “Tesla is increasingly bringing expertise in-house,” he said. 

“We've seen this with the SolarCity acquisition, which adds solar to Tesla's portfolio, as well as Tesla's recent announcements that the second iterations of the Powerwall and Powerpack will have inverters manufactured by Tesla itself.”

Simon said the Grohmann acquisition showed how Tesla is serious about ramping up production, while at the same time moving to become more vertically integrated. 

“Additionally, this acquisition could indicate greater interest in German markets, both for automotive and energy moves,” he said. “Germany has historically been home to a number of respected automobile manufacturers, some of which are starting to move into the energy space, such as Mercedes-Benz.” 

Mercedes-Benz recently announced a storage product for the U.S. market.

According to Simon, it makes sense for Tesla to examine markets where its competitors are strong across multiple income streams, such as storage, solar and automotive.

“We'll have to wait and see exactly what Tesla's strategy will be moving forward,” said Simon. “But with the acquisition of a German-based manufacturer, I'd say it's safe to assume that Tesla will make a concerted effort to move its businesses into Germany, and likely the rest of the EU, in the not-too-distant future.”