Tesla issued a statement attacking popular automotive blogger, Edward Niedermeyer, after his investigation into potential suspension defects caused Tesla stock (TSLA) to plummet 2.6% late in Thursday’s session. On Friday, it fell an additional 4.6 percent.
With major news outlets picking up Niedermeyer’s story, Tesla’s PR team sprung into action first trying to divert attention with a blast email about a price change and then by attacking the messenger and denying everything.
It all started when Niedermeyer posted this article titled, “Tesla Suspension Breakage: It’s Not The Crime It’s The Cover Up” on the Daily Kanban website Wednesday, June 8th. The article revealed that Tesla had been offering free or discounted repairs in exchange for customers signing non-disclosure agreements (NDA) barring them from talking about the repairs.
This offer, to repair a defective part in exchange for a non-disclosure agreement, is unheard of in the auto industry. More troublingly, it represents a potential assault by Tesla Motors on the right of vehicle owners to report defects to the National Highway Traffic Safety Administration’s complaint database, the auto safety regulators sole means of discovering defects independent of the automakers they regulate.
For Tesla, the bigger problem could come from the revelation in Niedermeyer’s investigation that the National Highway Traffic Safety Administration (NHTSA) took issue with the NDAs, which could prompt the federal auto regulator into further investigation. The well- documented suspension issue that caused Tesla to issue a Technical Service Bulletin in March 2015 could be reclassified as a safety issue and trigger a devastating recall. As Niedermeyer explains:
But the most troubling aspect of this affair is not the defect itself, or even Tesla’s possible use of a TSB instead of a recall. Defects happen to every automaker, and the line between a safety-related and non-safety-related defect can be subtle. The aspect of this story that demands explanation is not the crime, but the cover-up: why did Tesla demand an NDA from an owner in exchange for repairs to a defective vehicle? Even if there is a legitimate reason for such an agreement, Tesla should have made it explicitly clear that the agreement in no way infringes on an owners right to report defects to NHTSA.
Thursday, major news outlets across the country had picked up on the story and at about 3:30pm Eastern, Tesla’s stock (TSLA) went into free-fall, losing nearly 3% of its value in the half hour before trading closed. At around 6:30pm Eastern Tesla sent out a blast email announcing that the price of the Model S 60 with incentives had dropped to starting at $58,500. Facebook fell for the diversionary PR tactic by listing the minor Model S announcement as the reason for Tesla’s inclusion in trending topics.
There's some big Tesla news out today… and the Facebook trending box is ON IT! pic.twitter.com/bTUnTSVn6K
— E.W. Niedermeyer (@Tweetermeyer) June 10, 2016
Later in the evening Tesla issued a statement on their website titled, “A Grain of Salt.” In the statement Tesla tries to cast doubt about Niedermeyer but fails even to spell his name correctly:
Finally, it is worth noting that the blogger who fabricated this issue, which then caused negative and incorrect news to be written about Tesla by reputable institutions, is Edward Niedermayer. This is the same gentle soul who previously wrote a blog titled “Tesla Death Watch,” which starting on May 19, 2008 was counting the days until Tesla’s death. It has now been 2,944 days. We just checked our pulse and, much to his chagrin, appear to be alive. It is probably wise to take Mr. Niedermayer’s words with at least a small grain of salt.
We don’t know if Mr. Niedermayer’s motivation is simply to set a world record for axe-grinding or whether he or his associates have something financial to gain by negatively affecting Tesla’s stock price, but it is important to highlight that there are several billion dollars in short sale bets against Tesla. This means that there is a strong financial incentive to greatly amplify minor issues and to create false issues from whole cloth.
In the statement, Tesla also denies any suspension safety issue, the existence of an NHTSA investigation, and dodges the NDA question by stating, “Tesla has never and would never ask a customer to sign a document to prevent them from talking to NHTSA or any other government agency. That is preposterous.”
You can read the entire Tesla statement here.
Breitbart news has previously documented questions about Tesla’s quality control issues and lingering service issues with the Model S and Model X. The suspension issue is particularly noteworthy because of how much Tesla’s vehicles weigh. The Model X at nearly three tons is so heavy that it can’t be legally driven on the Brooklyn Bridge.
Despite the quick actions of Tesla’s PR department, the questions raised by Niedermeyer’s investigation aren’t going away.