January 27, 2017

Tesla has a lot of Model 3 orders to fulfill, but that is no reason to compromise manufacturing standards or build quality. Proving commitment to buyers, Tesla has cancelled a large parts order over technical standards, totaling roughly $100 million.

SHW Automotive in Germany is the surprised part supplier in this situation, claiming no indication leading up to the cancellation that there were any build-quality concerns. Axle-drive pumps are the piece in question.

Cancellation of parts orders is a fairly normal occurrence in manufacturing, perhaps not at this scale with this anticipated of a vehicle, but normal nonetheless. Therefore, perhaps more interesting than the part order cancellation itself, the speculations and rumors surrounding the cancellation. At least until Tesla spoke up.

At first, there were many, including German newspapers, that believed this cancellation could be in part due to political pressure by the new Trump administration to bring jobs back to America.

Tesla has stepped in, offering an official statement on the matter, in summation, Tesla says that “technical standards weren’t complied with.” We have no idea if that means that the parts in question were of poor quality, or maybe there was something in error, but not of quality concern. It may have been something like a reverse threaded bolt hole. Both of these things produce an unusable part for Tesla, but it could be interesting to see if SHW seeks damages in the courts.

For now, we have no idea where Tesla plans to get the axle-drive pumps from, perhaps they will bring the manufacturing in-house, as they’ve done before. We do not expect this to delay your Model 3 order, though, as production isn’t slated to begin for a few more months.

One thing is for certain, however, Elon Musk made it clear that things would be strict in order to push an accelerated production program for the Model 3. SHW, hopefully, is the only vendor that will be put out by this initiative.

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