Tesla explains cancelled order with German supplier SHW

Founder and CEO of Tesla Motors Elon Musk speaks during a media tour of the Tesla Gigafactory, which will produce batteries for the electric carmaker, in Sparks, Nevada, U.S. July 26, 2016.  REUTERS/James Glover II - RTSJT6T

Electric car maker Tesla Motors Inc (TSLA.O) said it cancelled a large order with Germany’s SHW (SW1.DE) because the supplier failed to meet its contractual obligations and Tesla did not want to put the production of its new Model 3 sedan at risk.

Tesla boss Elon Musk has warned in the past he would fire suppliers and reorganise internal teams who fail to meet target dates for production of the upcoming Model 3.

On Thursday Tesla confirmed it was the customer that cancelled a 100 million euros (85 million pound) order with SHW and denied it had anything to do with the new U.S. administration.

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 U.S. President Trump met chief executives, including Tesla boss Elon Musk, on Monday.

Tesla said the order was cancelled because the supplier’s product did not meet its technical standards.

“Tesla’s policy is to terminate any supplier that is unable to meet their contractual milestones or violates their non-disclosure agreement,” the carmaker said by email on Friday.

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

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.

[Source:- Reuters]