A first in Michigan: Tesla buys Grand Rapids auto supplier

Tesla Motors is acquiring a Grand Rapids-based auto supplier, giving the Silicon Valley technology company a manufacturing presence in Michigan, the Free Press has learned.

Tesla reached a deal to acquire Riviera Tool, marking the first acquisition for the burgeoning electric-vehicle and battery manufacturer, said a person familiar with the matter.

Riviera, which makes stamping parts that are shipped to Tesla's assembly plant in Fremont, Calif., has about 100 employees. Tesla is expected to retain those workers and eventually rename the operation Tesla Tool & Die, said the source who is not authorized to speak publicly about the transaction.

The automaker is also expected to continue doing business with other stamping parts suppliers.

"Tesla's aggressive volume goal for 2015 has the automaker working overtime to secure sufficient production capacity," said Karl Brauer, senior analyst at Kelley Blue Book. "Purchasing a Michigan-based tool and die company illustrates Tesla's need for a capable and dedicated manufacturing partner. It could represent the first of many such acquisitions we'll see in the months ahead."

The investment in Michigan gives Tesla a manufacturing footprint in the home state of the Detroit Three automakers: General Motors, Ford and Fiat Chrysler Automobiles. The company expects to continue adding jobs at Riviera, which is currently located near the Gerald Ford International Airport.

Tesla views the deal as crucial to improving the efficiency of its manufacturing processes. The company is facing immense pressure to expand 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.

Straining under demand for more parts, Tesla CEO Elon Musk has acknowledged that the logistics of ramping up production for a global product have involved more hurdles than he expected.

Terms of the acquisition were not immediately available.

The deal comes several months after Michigan Gov. Rick Snyder signed into law a bill that ensured Tesla cannot sell its vehicles directly to consumers through stores in the state. The nearest Tesla store is located in Chicago.

At a news conference in January at the Automotive News World Congress event in Detroit, Musk told reporters that he wouldn't rule out building a plant in Michigan in the future.

"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 to laughter.

Contact Nathan Bomey: 313-223-4743 or nbomey@freepress.com. Follow him on Twitter @NathanBomey.