PALO ALTO, CA—Tesla Inc. has agreed to acquire ATW Automation, which builds battery and transmission assembly lines for major automakers like BMW and Daimler. A subsidiary of Canadian ATS Automation Tooling Systems Inc., ATW was on the brink of liquidation due to a slump in orders, German media reported in September.

On September 25, ATS announced that certain assets and employees at one of its Germany-based units would be sold and transferred to a third party, without disclosing the name of the company. ATW is based in western Germany, employees about 120 people and has completed more than 20 battery production lines for international automakers, according to ATS' website.

Tesla plans to ramp up battery production significantly in the coming years and during a recent event presented innovations that it said would sharply reduce the cost of battery packs within the next three years. The company is currently building its third vehicle manufacturing facility near Berlin, which will also include a battery plant, and aims to start construction on a new vehicle factory in Texas this year.

Tesla's planned future lineup includes the light duty Cybertruck and the Semi truck, which require higher battery capacities.