Electric car maker Tesla Motors continues with its hyperaggressive spending indicating its growing confidence as an established player in the international motoring industry.
Consistent with its announcement to its shareholders in the fourth quarter of 2014 that it plans to spend $1.5 billion in 2015 on capital expenditures, Tesla Motors has been on a spending binge, all for the purpose of drumbeating itself as a major player in the motoring industry.
Since the start of 2015, Tesla Motors has spent $426 million as of the end of the first quarter of the year, which is nearly one-third of its capital expenditure budget for the year.
Tesla Motors further added onto it by recently acquiring Riviera Tool, an auto-parts maker based in Michigan. It is common knowledge that Michigan is home to the US carmakers and the entry of Tesla in the state also signified that it really wants to be known as a big player in the business, in the same level as the stature of the American Big 3 namely, Ford, GM and Fiat Chrysler, notes the Motley Fool.
Preparing to intensify production
Tesla’s recent acquisition of Riviera Tool is part of the company’s overall strategy to increase production of its Model S even as it prepares its Model X SUV for initial deliveries in the third quarter of this year.
Based on Tesla’s own target for the second quarter of this year, the company plans to deliver 20,500 vehicles in the first half of the year and 34,500 in the second half of 2015 to be able to meet its annual target of 55,000 vehicle deliveries.
Riviera Tool makes stamping parts that are then shipped to Tesla’s assembly plant in Freemont, California. It has about 100 employees which Tesla expects to retain. Reports also have it that Tesla will rename Riviera Tool to Tesla Tool & Die.
With a significant delivery target for 2015, Tesla really needs to execute production exceptionally well. It needs to speed up production than its present rate. The acquisition of Riviera will certainly boost its production ramp-up so it is a strategic buy-out for the company as it will definitely improve the efficiency of its manufacturing process.
Not about to slow down
There is no report at all that specifically indicate the amount that Tesla Motors will pay Riviera for the acquisition but it is something that the electric car maker can very much afford since it is still within its overall $1.5 billion capital expenditure budget for 2015.
Tesla is not about to slow down on its spending this year and will continue to be aggressive since it plans to focus on many things including the development of its Model X, a Gigafactory investment, stores and service centers, supercharger network expansion, and other product development programs including the Model 3.