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Another Twist: Tesla Sued By Magna Powertrain

The drama surrounding Tesla continues to unfold as recently discovered court documents show that the debatably legitimate electric automaker is being sued by Magna Powertrain. The lawsuit dates back to February 22 and states that Tesla failed to pay Magna for design of the two-speed transmission used in the Tesla Roadster. The story does have bit of he-said, she-said, unfortunately.

Tesla originally contacted Magna to design and build a total of 4,300 transmissions over a three-year span for the code-name Dark Star and 40,000 transmissions for the White Star. In March 2007, Tesla signed a "Development Agreement and a Statement of Work." Magna shipped the first prototype transmission to Tesla in July along with a note saying the first target production date of September would not be met.

This is where it gets messy. Tesla went and hooked up with Xtrac for transmission work and told Magna is transfer all design and development documentation to them. Magna says it got canned out of nowhere and was unaware of Tesla's unhappiness with its work.

Magna is looking for $6.5 million to compensate for all of the costs, fees and expenses lost by the sudden termination of contract. Another day, another girl fight. [Earn2Tech]

1:40 PM on Wed Apr 16 2008
By Travis Hudson
1,466 views
39 comments

Comments

  • Is that the one that doesn't work and currently unavailable?

  • Image of lascauxcaveman lascauxcaveman at 01:59 PM on 04/16/08 *

    I'm not sure if I makes me feel better that Tesla's tranny excuse wasn't just an excuse, but a legitimate excuse. Still pulling for ya Tesla. Prove those naysayers wrong, guys.

  • So what you're saying is its time I started my litigation? I don't want them to run out of money before I gets paid.

  • Image of graverobber- Same great taste, new low price! graverobber- Same... at 02:06 PM on 04/16/08 *

    Well, if you have to go to court for getting into a deal with a bad tranny, this is the better experience in my opinion.

  • I sense this whole Tesla project is going down. There is only so much legal and technical problems a small company just starting out can take. I bet there will never be a Tesla Roadster. And if there is, it will only be made for a year. Tops.

  • i don't know if Tesla is shady or not. perhaps it would have been more prudent to do more r&d before garnering so much attention. now, all they have is negative attention. when is this car supposed to hit the streets? seems like they should be offering their 2nd model by now. nope.
    it will be cool if the car makes it. is it becoming like a 914 that people lost interest in as it became dialed in too late in the game? except, this car is not production ready yet.

  • i was driving on the CA-35 just north of Alice's on Saturday. saw a purple Tesla go by heading south, and it was kind of sinister, not making a sound as it slid by. i almost didn't notice it ... kind of cool. glad i wasn't blind and trying to cross the road.

  • Many, many nascent sportscar-in-a-shed type operations have gone belly up purely through litigation- heck, even the offspring of a one-time giant MG Rover finally bit the dust over legal troubles with their bumper supplier.

    I really would like to see Tesla make it, but the amount of challenges they're up against, even at this late a date in the Roadster launch cycle, still presents some very real dangers to the company.

  • I have ten bucks that says not one full-production Tesla makes it to the street.

  • Image of Mad_Science Mad_Science at 02:54 PM on 04/16/08 *

    @Buzz Killington and Ford Tempo Fanatic: There already is a Tesla Roadster.

    They've delivered the first few units.

    [www.teslamotors.com]

    You're out 10 bucks...and you fail the reading comprehension section of the internet.

  • Image of Mad_Science Mad_Science at 02:56 PM on 04/16/08 *

    Re: This lawsuit. Unfortunately it'll come down to specific contact language and how hard people are willing to fight.

    If Tesla had an escape clause that let them nix the contract if Magna didn't deliver on time, they're probably free and clear...provided they can pay the legal bills to get there.

  • Looks like another perfectly good electric car company about to fold. Yay for $4 a gallon!!!!!!!!!

    Wonder what oil rep got Magna to start this lawsuit?

  • In the grand scheme of things, 6.5 million is not that large. One would hope that it is certainly not large enough to seriously hurt Tesla. As long as they don't develop more serious management and leadership problems then they still have a chance. I'm pulling for them, because I want a four door with neck-breaking acceleration!

  • So Tesla gets sued by the transmission manufacturer who made a transmission that was not to Tesla's spec? Lovely!
    The US legal system really has become a giant failure, not so much for this, but if nothing else the RIAA.

  • @diskreet:

    Agreed. Just think how different things would be if we went with the "loser pays" system they have in the UK. How that little bit of English common law made it out of our legal code, I have no idea.

  • If the contract says something to the effect of "Design a transmission that works and will last 200,000+ KM", then Magna has no case.

    The devil is in the details in the wording of the contract.

  • @MarkB: Oil companies, nothing, who do you think Magna's other customers are?

  • One word. Karma.

  • In a few years Hollywood will roll out the long-awaited sequel to "Tucker: The Man and His Dream."

  • So how much will a Tesla cost and how fast will it go?

  • Image of UDMan UDMan at 05:23 PM on 04/16/08 *

    I'm sorry to say this, but it looks like the long goodbye for Tesla. Goodbye Tesla, goodbye.

  • Image of lascauxcaveman lascauxcaveman at 05:26 PM on 04/16/08 *

    @DiscoQuinn: Neighborhood of $90 and 150mph, IIRC.

  • Image of lascauxcaveman lascauxcaveman at 05:44 PM on 04/16/08 *

    @UDMan: Oh piffle, UDdy. Tesla may yet die a death of a thousand cuts, but if it does, this will just have been one of many.

  • @lascauxcaveman: @DiscoQuinn: Where other numbers have said $100k and 130mph. Depends on which press release you read, I suppose.

    Have there been any independent performance tests of...anything related to this car yet? Not "I drove one around the block", but actual C&D style. Who puts any credence in factory performance numbers? Why start now? Seriously curious..if its a real car thats on the street, these numbers should be available.

  • WHOS KILLING THE ELECTRIC CAR NOW???

  • @Bad Juju:
    Well no, none of them really "exist" per se.

  • I hope they're able to recover from this. I'd wait for a great performing non-gasburning car. I'm not a tree hugger, but 150-200 miles without one drop of gas sounds great to me. I'd wait longer for this than a Camaro. The only draw back is that electric use is going to soar.

    I'm thinking Tesla didn't give them a chance to improve the transmission, but if I sign into a contract with you and you fail at delivering a serviceable product I'd probably bail too. All this time and you couldn't perfect a friggin 2 gear tranny? Especially around vehicle release time?

  • Image of UDMan UDMan at 08:16 PM on 04/16/08 *

    @lascauxcaveman: Oh and since when did you receive the Star Commenter treatment?

  • Hopefully this will be pretty open-and-shut. Tesla should be able to demonstrate they were in the right, and if not they're probably toast.

    (I am not a lawyer, mind...)

  • @lascauxcaveman: Tranny excuses are always entertaining.

  • @Turboner: you mean like "I was so drunk I didn't see the adam's apple"?

  • @akier: I very badly need to know if you're telling the truth, because my hunch is that at 10,000 RPM this thing will sound like you're driving a ride-on Makita drill. If it's really silent I'll actually start rooting for them to succeed.

  • @Travis Hudson: It's actually $5.6 million, and it probably won't kill Tesla, considering Tesla got funding of around $150million so far. That's only about 3.7% of their funding.

    @ranwhenparked:
    The situation here is different because it's just the development costs; Magna never actually made any production versions. If it was a dispute where production AND development was included, then maybe it will be enough to bankrupt the company because not only would the disputed money be a lot more, but also the production of the car would depend on the supply, but luckily that's not the case here.

    Of course, Tesla didn't even post a legal response yet, so it will take a while before we know who's right or wrong (namely if there are details in the contract that will turn the case to either side).


  • @kaneshadow: i just looked over, heard a slight "whoosh", and then i was around a bend. but it was damn quiet. i don't think he was flooring it though. it was quieter than an internal combustion car though, that's for sure.

  • Go Tesla. Please don't quit. Transmission is a very unlikely bottleneck for a upstart electric-supercar company. You overcame all the other major obstacles...just hang in there!

    And kill Fisker while you're at it...Biter!

  • I hope they make it, they finally made electric cars sexy enough to get attention from someone other than Ed Begley Jr. and that's quite a feat. What surprises me is that the big automakers who have hybrids and sporty cars haven't made a crossover with both that and the styling. It can't cost that much to put a sporty chassis on an electric drivetrain.

  • Image of lascauxcaveman lascauxcaveman at 12:20 AM on 04/17/08 *

    @Turboner: Excuses? If half the stories you've told me about Mrs. Turboner are true, then you don't need no steeking excuses to explain some hot tranny action.

    Ambiguously Gendered Mystery Guest Threeway! Don't forget the video cam.

    @UDMan: I got pinned sometime today. Graverobber and Beercheck too, so we're all gonna have to start being catty to one another. Obvs we can't hang out with you anymore.

    But the beauty of this is, I can now go over to Jezebel and give everyone advice on makeovers, tell the Valleywag regulars a baldfaced lie or two about Steve Jobs' poolhouse, and (perhaps sweetest of all) give really bad sex advice on Fleshbot. (ie: Hey Girls! And gay dudes! What your lover isn't telling you about oral sex is USE THE TEETH! Lots more teeth. Secretly, they all want to gouged up a bit down there, they are just a little too embarrased to admit it ... so bite away!)

  • Image of UDMan UDMan at 11:28 AM on 04/17/08 *

    @lascauxcaveman: Yea, I know you can't hang around with the rest of the riff raff any longer.

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