More Court Battles Slow Tesla Down
It turns out that Tesla Motors, which filed suit against Fisker Automotive Inc. on April 14, was sued earlier by Magna Powertrain USA Inc., according to court records. The two cases aren't directly related, but the lawsuits go to show that developing a new car from scratch is not for the faint-hearted. It is also an activity for people with very deep pockets.
When somebody sues General Motors or Toyota Motor Corp., it may be an expensive nuisance, but normally it's just a nuisance. Even a huge debacle like the SUV-rollover legal battle involving Ford Motor Co. and Firestone Tire earlier this decade was only a temporary setback for both companies in the long run. But for a start-up automaker like Tesla, with a long, long series of inter-dependent deadlines to meet, the Magna lawsuit shows that one dispute can disrupt the whole project.
Magna accuses Tesla, which is preparing its battery-powered Tesla Roadster for sale in late 2008, of breach of contract, in a dispute over transmissions that Magna developed for Tesla, according to the complaint.
According to the Magna suit, Tesla hired Magna in the fall of 2006, to develop a transmission to be ready for production in September 2007. From the beginning, the vendor warned Tesla there might not be enough time, according to Magna. The project missed its deadline. Because of the transmission glitch, Tesla had to reschedule its start of production to January 2008, the suit said. In October 2007, Tesla told Magna it was hiring another vendor to produce the transmissions, according to Magna's complaint.
The Magna complaint, filed in the Superior Court of California on Feb. 22, asks for about $5.6 million in compensation Magna says it is owed. Tesla has not yet filed a written answer to the suit, but based on the Magna complaint, it appears as if Tesla was unhappy with missing the deadline.
Meanwhile, in the same California court, Tesla in turn on April 14 sued Fisker Automotive, Lake Forest, Calif., for alleged fraud, breach of contract and violating trade secrets, according to court records. Fisker says the Tesla suit is without merit.
Tesla accuses Fisker Automotive and its CEO, former BMW designer Henrik Fisker, of taking ideas for the Fisker Karma, a hybrid-powered sports car, from Tesla's next car, called internally the WhiteStar, according to the suit. Tesla hired Fisker earlier, to help develop the car, the Tesla suit said.
Fisker hasn't filed an official legal response to the Tesla suit, but in an interview at the Detroit auto show in January, Henrik Fisker said that the key technology behind the Karma was developed by Quantum Technologies, a joint venture partner with Karma Automotive. Fisker said Quantum's computer software gets the best performance out of the combined gasoline-electric powertrain.
With even more companies involved, there are probably more shoes to drop in these cases.