Tesla lost a $5.5 million 85-car order from a German car rental service due to quality issues (TSLA)

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Tesla lost a €5 million ($5.5 million), 85-car order from German car rental service Nextmove due to quality issues, according toElectrek. Among the issues that Nextmove documented in the first 15 cars it received were "defective tires, paint and body damages, defective charge controllers, [and] wrong wiring harnesses or missing emergency call buttons."

The rental company says it pushed Tesla for assurances on the quality of its remaining order, which prompted Tesla to cancel the remaining 85 vehicles, though Tesla says it was Nextmove that canceled the order.

Here’s what it means: Tesla is feeling pressure to produce more vehicles, which could be leading the firm to stretch the limits of its manufacturing practices.

Tesla continues to hit record-high production and delivery numbers, resulting in an environment where defects may be more likely to occur. In Q2 2019, Tesla produced87,048 vehicles and delivered 95,200 more, setting a company record for the number of vehicles produced and delivered in a quarter. However, the pressure to hit these high numbers reportedly caused workers to cut corners, affecting the quality of Tesla’s vehicles.

In the midst of Tesla’s latest production push, CNBC reported four former Tesla employees said they were told by supervisors to use electrical tape to repair cracks on plastic brackets and housings, and that some vehicle tests were skipped to get vehicles off the assembly line quicker, statements which Tesla rebukes.

These aren’t Tesla’s only quality issues; the company has also struggled with some of its vehicles’ touchscreens developing a yellow hue for almost a year — a problem the company has yet to widely deploy a solution for, causing dismay among many affected owners.

The bigger picture: Continued quality and service issues will cause some customers in Europe to turn to traditional automakers, which have pedigrees of quality and more established service centers, to meet their electric vehicle (EV) needs.

Tesla has already experienced issues delivering vehicles to Europe, which — when coupled with the emergence of local competition — could hurt adoption. Initially, when Tesla began European deliveries, it received bad press over delays, impacting local perceptions of the brand.

At the same time, more local automakers are developing and producing EVs that can rival that of Tesla’s offerings. Well-established European brands such as BMW, Volkswagen, and Porsche are planning to release a plethora of EVs in the coming years.

These automakers, though new to EVs, have established strong reputations, trust, and extensive networks around Europe over their almost 100-year histories — for comparison Tesla was founded in 2003 and launched its first car, the Roadster, in 2008. Leaning on this history at a time when Tesla continues to stumble could be enough to shut the US automaker out of capturing any significant market share.

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