Bolt bother Tesla blames Bosch for Model S recall

Elon Musk’s e-car maker says rusty bolts from the German supplier were the cause of the March recall. It wants Bosch to foot the bill.
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It was virtually a footnote in Tesla’s quarterly report. Among figures disclosing higher revenues and lower losses than expected, the electric vehicle pioneer squarely laid the blame for a March recall of 123,000 Model S cars on the world’s largest auto parts supplier.

The power steering problems that necessitated Tesla's biggest ever recall were caused by Bosch's rusty screws.

“The recent voluntary recall of 125,000 Model S vehicles related to steering bolt corrosion was not material to our warranty reserves and is expected to be covered by the indemnification obligations of the supplier,” Tesla said in its quarterly report. The message was clear: the supplier will pay.

Tesla shares fell sharply despite the better-than-expected numbers, aided by a cavalier performance from boss Elon Musk. In an analysts call he dismissed questions about capital and profit.

Bosch has always been happy to boast of its role as supplier to the innovative cars. But the company, based near Stuttgart, was quiet on Thursday as a spokesman declined to comment on Tesla’s statement. Nor would he comment on how much money was at stake.

Tesla has been plagued by delays in bringing its new Model 3 mid-size car into serial production. And even though the first-quarter loss of $710 million (€593 million) was $40 million less than expected, it was nonetheless a record loss for the company. Analysts expressed concern about the production delays and cash burn before Mr. Musk cut them off, complaining the questions were too boring.

Katharina Kort is a Handelsblatt correspondent in New York. Martin-Werner Buchenau is a reporter based in Stuttgart. Darrell Delamaide adapted this into English for Handelsblatt Global. To contact the authors: [email protected] and [email protected].