A post on a small auto-industry blog that accused startup carmaker Tesla Motors of concealing potentially hazardous suspension breakages blew up into a major media story—and has taken some unexpected twists and turns as it's played out so far.
That's par for the course for much of the news, big and small, that involves the decade-old electric-car maker, which has now sold close to 150,000 electric cars over eight years.
The story brings to light Tesla's requirement that some owners sign Non-Disclosure Agreements that they not discuss repairs the company makes on cars whose warranties have expired.
The NHTSA calls that practice "troubling," and the story has now been covered by global news services and major U.S. media outlets.
FURTHER UPDATE: The story got even stranger later Friday night, when Tesla CEO Elon Musk tweeted that 37 out of 40 complaints submitted to the NHTSA concerning Model S suspension issues were fraudulent, with false vehicle location or VIN details.
Of greater concern: 37 of 40 suspension complaints to NHTSA were fraudulent, i.e. false location or vehicle identification numbers were used— Elon Musk (@elonmusk) June 10, 2016
UPDATE: Late on Friday, The Wall Street Journal reported that Tesla has revised its 'Goodwill Agreement' to " to make clear the contracts don’t prohibit customers from reporting suspected safety problems to the U.S. National Highway Traffic Safety Administration." It attributed the report to a "person familiar with the matter."
Here’s our roundup of what’s happened so far, including context on some of those events.
(1) The incident
The left-front hub assembly on a 2013 Tesla Model S separated from the control arm while the owner says he was driving it at about 5 mph.
His saga was first reported on April 28 in a Tesla Motors Club forum post by the owner of the car, apparently G.P. Cordaro of Cornellsville, Pennsylvania.
Rusted front suspension ball joint from 2013 Tesla Model S [image: GP Cordaro]
He describes himself as pleased with the car, which had 70,000 miles on it and hence was out of warranty.
Employees at the Tesla Service Center to which he sent the car said the “ball joint bolt was loose and caused the wear,” terming that “not normal.”
After further inspection, they also decided to replace the left-hand upper ball-joint and control arm assembly.
(2) The 'Goodwill Agreement'
Due to the abnormal wear, the repair was sent to Tesla to be considered for coverage despite the Model S being out of warranty.
Tesla Motors 'Goodwill Agreement'
A week later, the owner says, Tesla offered to cover half the repair bill of $3,100, contingent on him signing a document Tesla calls a Goodwill Agreement.
That document included the following wording:
The Goodwill is being provided to you without any admission of liability or wrongdoing or acceptance of any facts by Tesla, and shall not be treated as or considered evidence of Tesla’s liability with respect to any claim or incidents.
You agree to keep confidential our provision of the Goodwill, the terms of this agreement and the incidents or claims leading or related to our provision of the Goodwill.
In accepting the Goodwill, you hereby release and discharge Tesla and related persons or entities from any and all claims or damages arising out of or in any way connected with any claims or incidents leading or related to our provision of the Goodwill.
You further agree that you will not commence, participate or voluntarily aid in any action at law or in equity or any legal proceeding against Tesla or related persons or entities based upon facts related to the claims or incidents leading to or related to this Goodwill.
A document with similar language would more conventionally be viewed as a Non-Disclosure Agreement, or NDA.
(3) The blog post
The story only "got legs" in the media two days ago, when it was covered in a post on The Daily Kanban blog with the subtitle, "It's not the crime, it's the coverup."
The story was covered yesterday and today by a variety of more mainstream media outlets, including the Bloomberg news service, CNBC, The Wall Street Journal, and The New York Times.
Among other items that came to light during the coverage was a March 2015 service bulletin from Tesla that concerns "greater free play than expected" that can develop in front lower control-arm ball joints.
Tesla Motors service bulletin covering front suspension wear, March 2015
If not addressed, the condition can lead to accelerated wear that will require premature replacement of components.
The owner of the Tesla involved noted, however, that it had been his upper control arm that had separated.
2013 Tesla Model S owned by David Noland, Catskill Mountains, NY, Oct 2015
(4) The NHTSA
Yesterday, the NHTSA said it was reviewing reports of Tesla suspension issues—what administrator Mark Rosekind called "data-collection model"—which precedes any decision on whether it chooses to open a formal investigation into a safety concern.
Spokesman Bryan Thomas told Reuters news service the agency is "examining the potential suspension issue on the Tesla Model S, and is seeking additional information from vehicle owners and the company."
It also said it was investigating what it called a "troublesome nondisclosure agreement" that Tesla had apparently required owners to sign.
(5) Tesla's 'Grain of Salt'
Late last night, Tesla Motors posted a lengthy response, entitled "A Grain of Salt," on its company blog.
- The owner's case was very unusual, and no safety issue exists with Model S suspension
- Tesla provided requested information to the NHTSA in April; the agency has not identified any safety issue with Model S suspensions
- The idea that the Goodwill Agreement prevents an owner from talking to the NHTSA or any government agency is "preposterous"
- That agreement is meant to prevent customers using Tesla's actions against it in court, which the company says has happened before
- It is working with the NHTSA to "see if we can handle it differently"
- Tesla is extremely concerned about the safety of its cars; it identified issues that led to two different seat recalls to the NHTSA before a single customer complaint
The post also comments directly on Daily Kanban writer Edward Niedermeyer and some of his prior work regarding Tesla.
That's something that's virtually unheard of for auto companies to do in public, though it is known to happen in private.
(6) Hilarity ensues
Much discussion has ensued, and continues to do so.
Tesla owners, fans, and advocates have posted hundreds of comments in web forums and Facebook groups on the issue.
A short seller of Tesla stock posted a link to a Flickr album of broken Tesla Model S front suspension photos on the financial site Seeking Alpha.
And today's news brings a new flood of articles that summarize the facts.
Meanwhile, as financial sites have noted over the last 24 hours, Tesla's stock price was hit as the news filtered out yesterday.
(7) One owner's view
We spoke yesterday to another early Tesla Model S buyer, who views the issue with concern—but is equally happy with the car, and has put a like number of miles on it.
That owner wrote:
The requirement for an NDA for goodwill repairs sort of falls in line with other Tesla control-freak policies that reduce the owner’s ability to do what they want with their car.
Those include not doing crash repairs at non-authorized shops and not allowing totaled cars back on the road. As I understand it, Tesla prohibits these activities by disabling the car via the over-the-air link.
Also kind of fits in with their maddening lack of technical info about the car.
Until more information emerges—from the owner, from the NHTSA, from Tesla itself—that seems as good a summary as any.
Or, "Welcome to the automotive world, Tesla," as Autotrader analyst Michelle Krebs told Bloomberg.
“As they start selling more cars and expanding," she said, "these kinds of things will come up—so they have to be prepared for that.”