Tesla Cancels Large Order With German Supplier SHW — Why?

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Tesla has reportedly canceled a large order with the German automotive parts supplier SHW, an order totaling €100 million (~$107 million). What isn’t exactly clear until now is why the company did this, but a new public statement has apparently clarified this matter.

SHW reportedly failed to meet its contractual obligations and Tesla wasn’t willing to jeopardize the production of the Model 3 sedan.

This shouldn’t be a surprising explanation, as Tesla CEO Elon Musk has publicly stated in the past that suppliers would be fired and/or internal teams reorganized if target dates for the Model 3 production ramp up aren’t met.

The public statement was partly released to address rumors that Tesla cancelled the order because of pressure from President Trump and his administration.

Reuters provides more:

“The loss of the order sent shares in SHW, which assembles pumps and engine components as well as brake discs, to a four-month low on Tuesday. German media reports said the cancellation resulted from political pressure after US President Trump met chief executives, including Tesla boss Elon Musk, on Monday. …

“SHW said on Tuesday its customer was disgruntled over the technical specifications for axle-drive pumps which failed to meet its requirements, but SHW said it did not accept the reason.”

Not to over-generalize too much … but why does so much with the German automotive industry and media seem to pan out to some sort of face- or ego-saving measure? The media there can’t admit that one of their companies didn’t manufacture to the standards/timeframe required by a client?

Tesla has stated clearly at this point that SHW’s product didn’t meet the technical standards required, so the order was cancelled.

An email from Tesla read:

“Tesla’s policy is to terminate any supplier that is unable to meet their contractual milestones or violates their non-disclosure agreement.

“We have to be firm in this regard in order to keep the Model 3 program on schedule and prevent plot spoilers.”

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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