Tesla (TSLA) Acquires Michigan-based Riviera Tool - Analyst Blog
Tesla Motors, Inc. TSLA has acquired Riviera Tool LLC of Cascade Township in Michigan, per media reports. With this, the electric automaker has made its first acquisition and expanded its operations to produce more vehicle models, going forward.
Riviera Tool produces tools and dies that stamp out metal parts. Tesla believes that this acquisition will provide it with the support to enhance productivity while launching new models. Riviera Tool will aid in the manufacturing of new plastic parts and new metal-forming development.
With this acquisition, Tesla has expanded its operations to Michigan. However, the company is facing opposition to its direct-selling model in the state. Michigan has banned the direct sales of vehicles by any automaker, forcing them to use franchised dealers to sell vehicles.
The Big Three automakers in the U.S – Ford Motor Co. F, General Motors Co. GM and Fiat Chrysler Automobiles N.V. FCAU – have focused on electric vehicles, hybrids and hybrid electrics over time. The entry of Tesla into Michigan is expected to create some pressure on the Big Three. However, the strong position of the Big Three in the auto industry is expected to remain unaffected by the electric automaker’s entry.
Tesla is aggressively working toward expanding its product portfolio to boost sales. Currently, it sells only Model S vehicles. The automaker will start shipping the Model X in the third quarter of 2015. Moreover, Tesla’s third-generation electric car, Model 3, which is estimated to cost half as much as Model S, is expected to be unveiled in 2015 and launched in 2017.
The company’s ultimate aim is to produce an affordable family car which will make electric cars accessible to the masses. Tesla expects to deliver about 55,000 Model S and Model X vehicles globally this year.
Currently, Tesla carries a Zacks Rank #3 (Hold).
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