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Summary:

While Tesla Motors v. Fisker Automotive is a juicy story of alleged automotive espionage, we came across another lawsuit involving the Roadster maker as we were digging through the online records of the San Mateo Superior Court: Magna Powertrain Inc. USA v. Tesla Motors. And in […]

While Tesla Motors v. Fisker Automotive is a juicy story of alleged automotive espionage, we came across another lawsuit involving the Roadster maker as we were digging through the online records of the San Mateo Superior Court: Magna Powertrain Inc. USA v. Tesla Motors. And in this one Tesla is the defendant, not the plaintiff.

The suit, filed by Magna on Feb. 22 , accuses Tesla Motors of two counts of breach of contract for allegedly failing to pay Magna for transmission work. Magna was contracted in March 2007 to design a two-speed transmission for Tesla’s Roadster, then code-named “Dark Star.” Magna is seeking $5.6 million from Tesla, or about 56 new Roadsters.

This is just the latest twist in the saga of Tesla’s elusive transmission, which has caused major production delays and will require the company to retrofit the first vehicles later on with a new and simpler single-speed transmission. And Magna actually says in its suit that back September of 2006, when it started talking with Tesla, it originally suggested a one-speed transmission:

TESLA wants MPT to design, develop, test and produce a production-ready dual speed transmission for the Dark Star by September 2007. MPT informed TESLA that designing, developing, testing and producing a two speed transmission for the Dark Star by September 2007 would be very challenging and that TESLA should consider a single speed rather than dual speed transmission.

Tesla had originally contracted Magna Powertrain, a subsidiary of Canadian auto parts giant Magna International, to design and build 800 Dark Star transmissions in the first year, 1,500 in the second and 2,000 in the third. On top of that, Tesla contracted Magna to design and build 40,000 White Star transmissions, with production starting in March of 2009.

The suit says that in March of 2007, Tesla signed a “Development Agreement and a Statement of Work” with Magna to start work on the transmission. Magna says it shipped the first transmission prototype to Tesla in July and told Tesla that the September target would be missed. Tesla then pushed back the start of its pilot production to January 2008 and full-scale production to May.

The filing goes on to say that in October, Tesla instructed Magna to transition all engineering designs and development to Xtrac, the maker of Tesla’s interim transmission. Magna alleges it had no warning nor any indication that Tesla was dissatisfied with their work, but that the electric vehicle startup cooperated fully.

Now, Magna might be miffed about losing the contract, but it couldn’t have come as a complete surprise that their two-speed transmission was not what Tesla was hoping for. And the lawsuit does not allege wrongful termination of the contract, but instead seeks payment for “all outstanding costs, fees and expenses as required by the Development Agreement and the SOW,” to the tune of $5,599,024, plus interest and fees.

In the end, the single-speed transmission that will be put into the cars will actually be a Tesla in-house creation. Xtrac, the second transmission supplier, was contracted to make an interim transmission — Update: Xtrac was never contracted to develop a permanent solution, says Tesla. Darryl Siry, Tesla’s VP of sales, marketing and service, tells us:

“One of our lessons is that we need to have more control over our fate and manage the process in house.”

The startup seems to learn most of its lessons the hard way, and now the cost of those lessons might be settled in court.

Katie Fehrenbacher contributed to this report.

  1. [...] “Tesla Motors v. Fisker Automotive” is a juicy story of alleged automotive espionage, Earth2Tech has come across another lawsuit involving the Silicon Valley-based Roadster maker, this time involving the slightly more mundane topic of transmissions. But in this one Tesla is not [...]

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  2. [...] Earth2Tech has dug up a lawsuit filed by Magna on February 22, 2008 that alleges that the car company failed to pay Magna for transmission work it accomplished. The suit, filed in the Superior Court of San Mateo County, seeks $5.6 million in damages. [...]

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  3. [...] Earth2Tech has dug up a lawsuit filed by Magna on February 22, 2008 that alleges that the car company failed to pay Magna for transmission work it accomplished. The suit, filed in the Superior … [...]

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  4. [...] the process in house." Sure, sure, just as long as we get one for "testing," okay?Read | Permalink | Email [...]

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  5. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  6. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  7. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  8. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  9. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  10. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  11. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  12. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  13. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  14. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  15. [...] fate and manage the process in house.” Sure, sure, just as long as we get one for “testing,” okay?Read | Permalink | Email [...]

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  16. [...] y ahora será un juez quien decida el futuro de ese dinero.[Artículo en inglés]Read | Permalink | Email this | Comments Posts RelacionadosTesla [...]

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  17. [...] Earth2Tech has dug up a lawsuit filed by Magna on February 22, 2008 that alleges that the car company failed to pay Magna for transmission work it accomplished. The suit, filed in the Superior … [...]

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  18. [...] him a perfect candidate to design a hybrid drive train. In a separate, but not unrelated lawsuit, Magna Powertrain is suing Telsa Motors for breach of contract, alleging Tesla failed to pay the parts company for the design of its failed two-speed EV [...]

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  19. [...] Earth2Tech has dug up a lawsuit filed by Magna on February 22, 2008 that alleges that the car company failed to pay Magna for transmission work it accomplished. The suit, filed in the Superior Court of San Mateo County, seeks $5.6 million in damages. [...]

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  20. [...] there’s another suit afoot, one discovered by the intrepid reporters at Katie Fehrenbacher’s Earth2Tech blog. One of the companies contracted to do a two-speed transmission for the Tesla Roadster is suing for [...]

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  21. [...] enough, Tesla Motors is also being sued by its transmission supplier, Magna, for allegedly failing to pay them for contract [...]

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  22. [...] Earth2Tech has dug up a lawsuit filed by Magna on February 22, 2008 that alleges that the car company failed to pay Magna for transmission work it accomplished. The suit, filed in the Superior … [...]

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  23. [...] car and then announced they planned to create their own vehicle. On top of that, Tesla is also being sued for failing to pay a transmission supplier. Magna Powertrain sued Tesla for failing to pay Magna for its work to design a two-speed transmission [...]

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  24. [...] Tesla’s Other Lawsuit: Transmission Troubles: The story started off that Tesla Motors has filed a lawsuit against Fisker Automotive alleging Fisker stole design idea for his own range-extended electric car. Digging around in the San Mateo Super Court database we found another lawsuit involving Tesla, but this time they were being sued by their original transmission engineers. [...]

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  25. [...] Earth2Tech has dug up a lawsuit filed by Magna on February 22, 2008 that alleges that the car company failed to pay Magna for transmission work it accomplished. The suit, filed in the Superior … [...]

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  26. [...] A relationship with powertrain supplier Magna Powertrain has now resulted in a lawsuit that we reported about here. Magna is seeking $5.6 million from Tesla, or about 56 new [...]

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  27. [...] is involved in a handful of legal actions involving IP theft and broken contracts. In February, Magna Powertrain sued Tesla for breach of contract, alleging the EV company failed to pay it for design and engineering work it [...]

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  28. [...] the litigious learning experience of making the Roadster will help Tesla steer clear of the same hurdles with its [...]

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  29. [...] with the electric car startup Tesla. First the suit Tesla filed against competitorFisker, then Magna’s suit against Tesla for an alleged breach of contract — now CNET reports that the [...]

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  30. [...] of lawsuits in 2008. First of all Magna Powertrain, which designs, tests and makes powertrains, filed one against the electric-sports-car startup in February, alleging that Tesla owed it $5.6 million for [...]

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  31. [...] the Canadian company whose supply contract with electric sportscar startup Tesla Motors ended in a multi-million-dollar lawsuit last year — are vying this week to take a piece. At least one high-profile model is not on [...]

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  32. [...] required the company to retrofit early models with a new and simpler single-speed transmission, and landed the company in court with the second company hired for the job — none other than Magna Powertrain, a subsidiary of [...]

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  33. [...] No Comments Posted June 11th, 2009 at 8:05 am in Automotive Electric car maker Tesla Motors is no stranger to lawsuits, and now it’s been hit with an ugly one. In a 146-page complaint filed May 26 in San Mateo [...]

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  34. [...] troubles. BorgWarner came on board after an earlier deal with auto parts giant Magna Powertrain ended in a lawsuit. And before that the transmission had caused major production delays and required the company to [...]

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  35. [...] troubles. BorgWarner came on board after an earlier deal with auto parts giant Magna Powertrain ended in a lawsuit. And before that the transmission had caused major production delays and required the company to [...]

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  36. [...] centered on the question of who should get credit for founding the startup that has by now survived several lawsuits, a series of delays and serious financial troubles — and emerged with a major investment from [...]

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