05/22/2018

Tesla Inc Chief Executive Officer Elon Musk has sought to play down a report identifying “big flaws” in its Model 3 sedan, admitting there is a braking issue with the vehicle but saying it will be fixed with a software update within days.

Responding to a review by influential U.S. magazine Consumer Reports which stopped short of recommending the car, Musk said in a round of tweets late on Monday that the magazine’s tests - which used two separately-sourced vehicles - had been of older versions of the car that had already been improved upon.

The issue, which ate into gains for Tesla shares on Monday, came at a time when Tesla is dealing with reports of crashes involving its vehicles and growing scepticism over its finances.

Tesla stock, down around $100 dollars since last September, gained around 1 percent on Tuesday, having finished almost 3 percent higher on Monday, helped by an easing of trade tensions with China which may aid its plans to produce there.

“With further refinement, we can improve braking distance beyond initial specs. Tesla won’t stop until Model 3 has better braking than any remotely comparable car,” Musk wrote in exchanges with other twitter users.

“Also Consumer Reports has an early production car. Model 3 now has improved ride comfort, lower wind noise & many other small improvements. Will request that they test current production,” he wrote.

Production of Tesla Model 3s began in July of last year and the first regular customers only received their cars in December after some Tesla employees.

Consumer Reports said in the review on Monday that it had sourced a second privately-owned Model 3 to confirm initial results that showed the sedan braked slower than a full-sized pickup truck. The report did not mention the age of either car used in the testing.

Calling the review “very strange”, Musk also said that the variability in stopping distance was due to an ABS (Anti-Skid Braking System) calibration algorithm.

“The CR braking result is inconsistent with other reviewers, but might indicate that some Model 3s have longer braking distances than others,” he said.

“If so, we will address this at our expense. May just be a question of firmware tuning, in which case can be solved by an OTA software update.”

Analysts said the magazine’s story was a bad advertisement for Tesla.

“While the negative reports of braking issues will not deter Tesla brand enthusiasts, it might raise doubts among the more casual buyer,” said Neil Saunders, Managing Director of consumer research house GlobalData Retail.

“It is important not to be too harsh on Tesla as other vehicles have had their share of safety and technical issues. The issue for Tesla is that unlike other car companies, it is a young brand that needs to win people over so can’t afford too many missteps.”

Reuters (Reporting by Sonam Rai and Vibhuti Sharma in Bengaluru; Editing by Patrick Graham)