For some time, Tesla had been evaluating Nemak SAB and, in the first half of 2016, the carmaker talked with the company possibly becoming a direct supplier of aluminum housing components for its Model 3 electric sedans. 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 unnerved the northern Mexico-based unit of the conglomerate Alfa SAB.

“We’re a company that’s always looking to grow, but we’re fairly conservative,” Nemak Chief Executive Officer Armando Tamez said Aug. 23 from his office in the border state of Nuevo Leon. “We saw a high-risk project.”

In retrospect, Tamez was right to have suspected that Musk’s forecasts were overly ambitious. While the Model 3 has no doubt been a headline-grabbing sensation, with thousands lining up to reserve their car starting back in March 2016, Tesla has come up well short of production projections. Bloomberg’s best guess places total output at fewer than 85,000 vehicles since the first Model 3s were built in July 2017. The company confirmed in July of this year that it had asked a handful of suppliers to give back some cash.

A Tesla spokesman said Nemak bid repeatedly to supply certain parts for the Model 3. But after a competitive procurement process involving several other companies, the carmaker selected another supplier that was better aligned with its needs.

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