Tesla Motors Makes its First Ever Acquisition: Michigan-Based Tool & Die Auto Supplier

Throughout its short history, Californian automaker Tesla Motors [NASDAQ:TSLA]  has worked hard to beat Detroit at its own game, producing super-fast, highly-sophisticated luxury electric cars that no other automaker has managed to beat.

In order to make more of these, Tesla needs more manufacturing machinery.

In order to make more of these, Tesla needs more manufacturing machinery.

Tesla has even shunned the rest of the U.S. auto industry by staying clear of Detroit and the rest of Michigan, choosing the high-tech draw of the west coast over the proud, long history of Motor City.

Yet in the days leading up to Tesla’s Q1 earnings report, it seems Tesla did go to the heart of America’s auto industry to do something that it had never done before — acquire another business to help streamline its manufacturing process and continue to stay ahead of the competition.

The company in question is Riviera Tool, LLC, an industrial tool and die production company from Cascade Township, a short drive from Grand Rapids. Responsible for designing and building the massive sheet metal stamping machinery used in most modern auto factories, Riviera has long held Tesla among its list of customers, alongside Ford, General Motors, Chrysler, Nissan, Daimler and BMW.

As TheDetroitNews details, the acquisition has already taken place for an as-yet undisclosed sum.

Tesla’s first presence in the state of Michigan, Riviera Tool LLC will be renamed to the Tesla Tool and Die Factory in the near future, with most of the 100 employees expected to continue working for the firm under its new owners.

The Tesla production facility in Fremont has just undergone an upgrade to ready itself for the Model X.

The Tesla production facility in Fremont has just undergone an upgrade to ready itself for the Model X.

Initially, Tesla says the facility will continue to produce manufacturing tools and dies for its existing customers, but over time it will slowly ramp down its other commitments to focus solely on Tesla’s own needs. During that time and after the transition is complete, Tesla says it expects to continue using other parts suppliers for its own needs as necessary.

The decision to purchase the industrial tool and die company might seem like a diversion for the Californian company, especially given its large financial commitments at the current time.

In addition to building its Gigafactory in Reno, NV, Tesla Motors is readying its Fremont automotive plant for the start of production of the Tesla Model X SUV later this year.

The second model to be built at the Fremont facility, the arrival of the Model X will dramatically increase production volume at the factory. As a consequence, Tesla has been increasing its plant machinery count to ready itself for this increase.

Then there’s the recently-launched Tesla Energy products, which also require their own dedicated machinery and manufacturing production lines.

As a consequence, Tesla needs high numbers of industrial sheet metal tools and dies, as well as a constant, high-quality source of replacement dies in order to keep up with production demands.

Ordinarily, the process of ordering and manufacturing new dies can be a time consuming and costly business. Bringing that manufacturing in-house through a Tesla-owned operation cuts the lead time and overall overheads associated with these essential but expensive parts of the modern automotive manufacturing process.

It also demonstrates something that the rest of the auto industry are struggling to accept: Tesla is no-longer a niche-market startup company.

It’s a rapidly-growing international automaker with its eyes set on proving that Detroit’s traditional attitudes to vehicular manufacturing and design aren’t necessarily apt for the fast-paced, gadget-mad twenty-first century.

 

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