Nemak turned down an offer to supply parts for Tesla, here’s why…

Nemak turned down an offer to supply parts for Tesla, here’s why…

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Signing a deal with Tesla is one opportunity many automotive suppliers dream of, but Monterrey-based aluminum parts manufacturer Nemak turned down an offer due to the unrealistic production goals, according to an article by Bloomberg.

The story details that Elon Musk and other Tesla executives met with Nemak CEO Armando Tamez in the first half of 2016 to talk about the possibility for the Mexican company to supply aluminum housing components for its Model 3. “But Tesla’s projections, its prices and the pressure Musk had put on himself and his company to produce as many as 500,000 vehicles by 2018 was too much.”

The article shows how Tamez expertise and “conservative” approach when it comes to running the numbers came in hand when he was invited to take a look at the prototypes and the assembly plant. 

Despite describing the Model 3 prototypes as “nothing short of extraordinary,” the official said he didn’t find Tesla’s production targets to be realistic. “The tricky part for Tesla would be ramping up production with the precision that other automakers have been doing it for years,” he added.

Bloomberg estimates Tesla has built an average 3,274 Model 3 vehicles per week (as of September 19), far below the half-a-million target. Building output capacity for 500,000 units that at the end wouldn’t be required would have cost Nemak a lot of money. “We just thought it was too high risk for Nemak,” Tamez said.

It’s worth noting that a Tesla spokesman denied the story and said that Nemak bid repeatedly to supply certain parts for the Model 3. "But after a competitive procurement process, the carmaker selected another supplier that was better aligned with its needs."

You can read the whole article here.



- Nemak reaches 3-million parts milestone in its new division for electrified vehicles

- Tesla opens Model 3 order system for all customers in US, Canada

- Nemak’s net income up 3% in first quarter as it earns new contracts for electric vehicles