Tesla Motors Inc. confirmed late Wednesday it has acquired a west Michigan auto supplier as it ramps up production of electric vehicles.
Tesla spokeswoman Alexis Georgeson said the company this week acquired Cascade Township-based tool and die manufacturer Riviera Tool, LLC and will rename it Tesla Tool and Die Factory. Riviera has about 100 employees and Tesla expects the majority will remain after the sale. She declined to disclose the sale price.
“This acquisition enables Tesla to bring additional capabilities in-house, streamlining production and facilitating the introduction of Model X and increased production at the Tesla Fremont (California) factory,” Georgeson said Wednesday. “This is our first presence in Michigan.”
Tesla builds its cars in Fremont at a former joint venture between General Motors Corp. and Toyota Motor Corp.
Riviera designs, develops and manufactures large-scale, custom metal stamping die systems used in the high-speed production of sheet metal parts and assemblies for the global automotive industry. Its customers have included Detroit’s Big Three automakers, BMW, Nissan and Daimler.
The Palo Alto, Calif-based electric vehicle manufacturer said Wednesday it still plans aggressive growth this year after producing about 11,000 vehicles in the first quarter, and anticipates producing 55,000 vehicles this year following nearly 35,000 last year. Tesla’s first SUV, the Model X, is slated to begin production in the third quarter.
Riviera has been a key supplier to Tesla for the Model S. Georgeson said Riviera will complete current projects for other automakers but then wind down those operations to focus on Tesla needs. She said Tesla will continue to use other tool and die manufacturers as suppliers.
Tesla aims to sell 500,000 electric vehicles a year by 2020 and a “few million a year” by 2025. The company has a market capitalization of about US$29 billion.
Tesla CEO Elon Musk was asked during an appearance in Detroit in January if he would consider building a factory in Detroit; Musk didn’t rule it out but took a shot at the Legislature.
“Not out of the question — maybe Michigan shouldn’t stop us from selling cars,” he said. “That would be a nice gesture,” Musk said.
This is Tesla’s first acquisition of any kind, and the company didn’t rule out future acquisitions — including in Michigan — to speed production.
Last year, Gov. Rick Snyder signed legislation banning automakers from selling vehicles directly to customers in Michigan, a move pushed by local auto dealers to block Tesla from selling cars.
Tesla has poured the foundation on a US$5 billion battery factory in Nevada to make battery cells beginning in 2016 to reduce battery costs. It is a big bet, Musk said, “but I don’t know any other way to do it.” He said Nevada is “only providing a few hundred million” for the factory, not the US$1.5 billion that some have suggested.
Karl Brauer, senior analyst at Kelley Blue Book, said the supplier acquisition is a sign Tesla is serious about building vehicles to compete with the industry’s major car manufacturers.
“It’s another sign (Elon Musk) is growing up; he’s becoming a real automaker,” Brauer said. “He’s learning quickly that as you grow you have to have more access to production capability.”
Brauer said this year is an inflection point for Tesla as it opens for business in China, and plans the new Model X after delaying the launch. Tesla previously said the Model X would be available by mid-July.
Owning a traditional auto supplier will better help Tesla control the auto-building process.
“This is an obvious sign Elon wants to solve a problem,” Brauer said. “He’s just about to launch an all-new model. He went to where he could get the best deal on the best supplier to move things forward quickly.”
It could be a sign of the automaker’s future plans. “I think it’s very possible you’ll see more acquisitions, and they’ll be where it makes most sense,” Brauer said. – Detroitnews.com