Owners, operators, pedestrians and even suppliers,
beware! Tesla's CEO recently announced that Tesla is
going to skip traditional prototype testing and go straight to
production in order to make a September deadline to provide
"production vehicles" to the nearly 300,000 beta-testers
(I mean, purchasers) of this new vehicle.
Yes, you read that correctly. Tesla will not do any comprehensive
vehicle level testing before selling its Tesla 3 to consumers, a
decision that effectively makes the purchasers, operators,
occupants, pedestrians and suppliers of the Tesla 3 guinea
pigs.
Vehicles are designed and developed in parallel with the
componentry incorporated into them. Of course, computer models can
be run, material specs can be met, clearance stack-ups can be
analyzed, heat patterns and vibrations can all be
"modeled," and should be. But it's not until the
entire vehicle is assembled and tested on actual roads, under
normal and very extreme conditions for many miles, that the true
performance and lack of "safety-related defects" can be
determined. And as the industry knows all too well, safety-related
defects can be deadly, which is what makes Tesla's decision to
go straight to production so astonishing.
So, for those in the general public, if you see a Tesla 3 coming
down the road, be cautious. If you own one of these, make sure that
your insurance coverage is relatively high, particularly if you
plan on driving in autonomous mode with the current Tesla
technology. And for suppliers in the Tesla supply chain, be certain
that you have negotiated Tesla's one-sided and onerous terms
and conditions to better protect your company. At minimum, you
should insist that any product-related exposure – whether a
safety-related recall or a tradition warranty claim – is
determined based on a robust joint root cause analysis of the
system into which your parts are incorporated and that your total
liability is limited if at all possible. That's always
important when dealing with any OEM. But, in the case of
Tesla's Model 3 and the added risk that suppliers will take on
because that Model 3 has never been fully prototype tested before
being sold to the general public, it's even more critical.
This article is reprinted with permission from Warner Norcross & Judd LLP. This article is not intended as legal advice. For additional information, please contact the author of this article.