Tesla Motors Inc Buys Michigan Auto Supplier

Tesla Motors has acquired Riviera Tool, a Grand Rapids, Mich.-based auto supplier, according to a report from the Free Press. The acquisition marks the first instance when Tesla has acquired another firm.

Tesla Motors Inc Buys Michigan Auto Supplier

How the deal will help Tesla

Riviera supplies stamping parts to Tesla Motors’ assembly plant in Fremont, Calif. and has around 100 employees. The EV manufacturer will probably keep all those workers and eventually rename the company Tesla Tool & Die, says the report, citing a source. Further, more employees could be added in Riviera, which is situated near the Gerald Ford International Airport. The EV manufacturer reportedly expects to keep working with other stamping parts suppliers as well.

The Elon Musk-led company states that the deal is significant in enhancing the efficiency of its manufacturing processes. The company is keen to expand the production of its Model S luxury electric sedan and is expected to begin production of the all-new Model X luxury electric crossover in the third quarter.

The automaker has set a goal that may be too high for the 2015, due to which it is working overtime to secure sufficient production capacity, according to Karl Brauer, a senior analyst at Kelley Blue Book. Tesla does require dedicated partners, and the recent acquisition could solve this issue.

Tesla’s CEO is aware of the fact that without an increase in the supply of parts, a increase in production for is difficult. There was no word on the terms of the acquisition.

Tesla marks a physical presence in Michigan

After acquiring a company in Michigan, Tesla has physically established itself in the home state of Detroit, which is where automakers General Motors, Fiat and Chrysler Automobiles are based.

The Palo Alto-based company took this move a few months after Michigan governor Rock Snyder approved a bill agreeing that the company cannot sell its vehicles directly to consumers through stores in the state. The nearest Tesla store is located in Chicago.

In January during the News Grand conference at the Automotive News World Congress event in Detroit, Musk told reporters that there are possibilities the company could set up a plant in Michigan.

“It’s not out of the question. Maybe Michigan shouldn’t stop us from selling cars here. That would be a nice gesture,” he said at that time.