Damage caused by improper installation or faulty product?

I installed a 40 A, 120-277 V timer on my hot water heater. I fed the original wire of the heater into the timer and ran identical wire type (10 AWG, 600 V Romex) from the timer to the heater.

Worked great for over 2 months and then I detected an odd smell for several days. I didn't know what caused the smell until after we lost hot water. That's when I realized one of the 6 or so terminals in the timer had a lot of melted plastic around it and some disintegrated metal in it. I wish I could post a picture. Timer stopped working and never tripped a breaker.

What's more likely, me installing it incorrectly or a defective product?