Tesla Motors Inc (NASDAQ:TSLA) Sues Supplier Hoerbiger Automotive Comfort Systems


Tesla Motors Inc (NASDAQ:TSLA) sues German supplier Hoerbiger Automotive Comfort Systems for not meeting the expectations of falcon doors. The failure of the German supplier caused the delay in the production of Model X vehicles. The production is said to have been delayed for up to two years and even though Tesla is shipping, the volumes have not reached the expected levels.

Tesla and Hoerbiger had a partnership signed in February 2014. Tesla claims Hoerbiger Automotive misrepresented their capability to design and deliver hydraulic devices to lift doors. However, the supplier failed Tesla grossly. The deal never entered production phase though Hoerbiger claims that they should pay since Tesla had breached the contract.

Tesla’s primary reason for discontinuing the contract is that Hoerbiger designed prototypes of the devices, which leaked oil, caused the door to sag; they didn’t open with speed or symmetry and were prone to overheating.

In the lawsuit, Tesla claims it paid Hoerbiger $3 million and believes it owes nothing to the supplier.

The deal was however terminated in May 2015 when Tesla had to hire a new supplier. Tesla hired another vendor to create the Falcon door lifting mechanism. In the lawsuit, it has been noted that Tesla incurred millions of dollars in damages including the cost to re-tool the whole car so that it would be compatible with the new suppliers’ design. The lawsuit also notes that Tesla was forced to pay a premium to the new supplier so that the job would be done quickly.

Model X was first to showcase in January 2012. During this period, Tesla was hoping to put it on sale in December 2013. Tesla failed to meet the set launch as the vehicles were only delivered to the customer in September 2015. Currently, very few units have been given, but Tesla is hoping to ramp up production.

The lawsuit is asking the judge to agree that Tesla never breached the contract and owed Hoerbiger nothing. It also aims to pay for the damages relating to negligence of misrepresentation based on what Hoerbiger was supposed to deliver and what it did produce.