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Tesla faces threat of strike that could disrupt Model 3 production

Members of Germany's metal workers' union IG Metall.
Jens Buttner | AFP | Getty Images
Members of Germany's metal workers' union IG Metall.

A labor dispute is brewing at Tesla's German robotics unit that could disrupt Tesla's plans to boost production, if workers choose to strike.

The German industrial workers union IG Metall is set to decide on Tuesday whether it will call a strike at Tesla Grohmann Advanced Automation in Prum to force Tesla to enter wage negotiations, according to The Wall Street Journal.

Tesla acquired manufacturing automation company Grohmann engineering in November to help the electric car maker meet its goal of boosting annual production from 84,000 in 2016 to a planned 500,000 cars in 2018 (and then to 1 million in 2020).

"As the machine that builds the machine," said a Tesla blog post announcing the acquisition, "our factories are so important that we believe they will ultimately deserve an order of magnitude more attention in engineering than what they produce."

"We continue to work directly with Tesla Grohmann employees and are prepared in the event there is an action initiated by the union," Tesla told CNBC in a statement. "We don't anticipate any impact on the Model 3 timeline."

Tesla is working hard to begin production and make its first deliveries of the Model 3 sedan, which will be priced at around $35,000, this year.

Tesla said in a letter to shareholders in February that the "Model 3 program is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018."

Some analysts have expressed skepticism that Tesla can achieve its production targets for the Model 3 in the next few years. For example, Morgan Stanley analyst Adam Jonas — who is generally bullish on Tesla — told Bloomberg in late March his own forecasts are more far more conservative than those of the company.

IG Metall officials were not immediately available to comment when contacted by CNBC.

Read the full story in The Wall Street Journal.