From Guest Blogger Jordan: Tesla Buys an Auto Parts Supplier Based in Michigan

Just a few days after unveiling the Powerwall home battery system, which promises to ensure independence from the power grid for homes and businesses, and possibly cause some radical changes in the energy market, Tesla Motors has announced that it has acquired a company that manufactures automotive parts, in a bid to ramp up production. The Detroit Free Press reports that Elon Musk’s company has bought an auto supplier based in Michigan, which is the first acquisition made by the country’s leading all-electric car manufacturer, an important milestone for such a relatively young company.

Tesla has acquired a manufacturer of automotive stamping parts based in Grand Rapids, Michigan, called Riviera Tool, which has been a supplier for the California-based automaker for a few years prior to this acquisition. “This acquisition enables Tesla to bring additional capabilities in-house, streamlining production and facilitating the introduction of the Model X and increased production at the Tesla Fremont (California) factory,” Georgeson said Wednesday in a statement for the Free Press. “This is our first presence in Michigan.”

Tesla officials said that the company intends to keep all 100 employees that Riviera Tool currently has, but the supplier will eventually be renamed into Tesla Tool & Die. As reported by the Free Press, Riviera Tool manufactures and designs custom metal stamping die systems, that are used for production of sheet metal parts for automotive applications.

This acquisition is probably Tesla’s answer to the series of supply chain challenges it has been facing lately, which have prevented the company from increasing production volumes. Tesla’s manufacturing process has been deemed inefficient, resulting in various inconsistencies and flaws in certain functionalities in the extremely popular Model S luxury sedan, so the car maker hopes to overcome these issues by establishing a presence in Michigan.

Musk’s company has some pretty ambitious plans as far as production targets are concerned, having set a goal of building as much as 500,000 vehicles a year by 2020, and millions of units by 2025. Acquiring a well-known automotive supplier will definitely help Tesla increase production, and edge closer to the world’s largest car manufacturers, which produce and sell millions of vehicles each year.

However, even though acquiring a company based in Michigan – which is where America’s Big Three car makers are headquartered – makes a lot of sense in terms of creating the best possible conditions for a high-volume production, it comes as a bit of a surprise, given that this is one of the states that ban Tesla from selling its cars directly to consumers. Musk said a couple of months ago that he hopes Michigan will consider raising this ban, so maybe Tesla’s presence in the state ensured through this acquisition will be a step towards a major change of heart among state lawmakers.

Auto industry observers believe that this will not be Tesla’s only acquisition, expecting the Palo Alto car maker to buy more suppliers that would help accelerate and improve its manufacturing process in the near future, which might include companies based outside the U.S., as well.