+

Cookies on the Business Insider India website

Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.

Close
HomeQuizzoneWhatsappShare Flash Reads
 

Tesla says accusations that it hid Model S trouble could be motivated by short sellers

Jun 10, 2016, 18:28 IST

William Wei, Business Insider

Tesla responded to a report that it used non-disclosure agreements to downplay suspension problems with its Model S electric sedans, admitting that it uses "goodwill" agreements in exchange for repairs.

On the company blog late Thursday, Tesla said the point of these agreements is so that repairs it makes aren't "used against us in court for further gain."

Still, the National Highway Traffic Safety Administration described the NDAs as "troublesome" after confirming a report by blogger, Edward Niedermayer, who initially reported on the Tesla's use of the non-disclosure agreements.

Niedermayer said the NDAs could restrict customers ability to report incidents to the NHTSA, something that Tesla vigorously denied. Tesla also included strong language about Niedermayer, suggesting - without evidence - that short-sellers who are betting against its stock may have a hand in the report.

"There is a strong financial incentive to greatly amplify minor issues," the company said.

Advertisement

"When our customers tell us something went wrong with their car, we often cover it even if we find that the problem was not caused by the car and that we therefore have no obligations under the warranty," Tesla wrote in its blog post, titled "A Grain of Salt."

The post went on:

On Thursday, NHTSA spokesperson Bryan Thomas said that the agency is looking into the issue and seeking additional information from Tesla and Model S owners. The agency is also looking into the language in Tesla's nondisclosure agreement.

According to Reuters, the review is a preliminary step before the agency decides whether or not to launch a formal investigation.

Advertisement

Here's the complete statement from the NHTSA:

NHTSA is examining the potential suspension issue on the Tesla Model S, and is seeking additional information from vehicle owners and the company. NHTSA learned of Tesla's troublesome nondisclosure agreement last month. The agency immediately informed Tesla that any language implying that consumers should not contact the agency regarding safety concerns is unacceptable, and NHTSA expects Tesla to eliminate any such language. Tesla representatives told NHTSA that it was not their intention to dissuade consumers from contacting the agency. NHTSA always encourages vehicle owners concerned about potential safety defects to contact the agency by filing a vehicle safety complaint at SaferCar.gov.

The entire Tesla blog post is available here.

The issues with Model S suspensions were covered at the Daily Kanban. Tesla responded to the details of that report, but also questioned the motives of the blogger:

There's no evidence that Niedermayer or the Daily Kanban is seeking to gain from this issue. Bertel Schmitt, who joined Niedermayer at the blog after both journalists had worked at The Truth About Cars, responded to an inquiry from Business Insider, saying that neither he nor Niedermayer held any positions in Tesla stock.

Advertisement

In reaction to the news of the NHTSA review, shares of Tesla fell more than 2.5% in trading on Thursday afternoon.

NOW WATCH: We went inside Elon Musk's futuristic Tesla factory filled with over 150 robots

Please enable Javascript to watch this video
You are subscribed to notifications!
Looks like you've blocked notifications!
Next Article