Tesla's Questionable Public Relations Attempts
Tesla Motors is always fun to follow. Last week was packed with drama for the automaker: a passionate blog post, defensive tweets, a dubious claim, and a bit of sarcasm. All of this Tesla drama happened to be centered primarily around a single story about the company's battery fires and NHTSA's decision to open up an investigation to look into the fires. Amidst all the noise, here are the recent developments regarding the fires that could benefit from some commentary.
Tesla's CEO says a recall is unlikely
A few weeks ago, after all three fires, Tesla CEO Elon Musk said in an interview at The New York Times DealBook conference that "There's definitely not going to be a recall." Notably, however, Musk's language has toned down slightly in his more recent public statements. "... [We] think it is highly unlikely ... [that] something is discovered that would result in a material improvement in occupant fire safety," Musk said in a recent company blog post.
With no injuries from fires and a rating from the NHTSA as the safest car ever tested in the U.S., Musk has a solid chance of turning out to be correct. But, of course, it's also possible that the NHTSA could decide there is a design defect that could require a recall.
Who is right? Musk or Strickland?
Tesla's passionate blog post in defense of "an onslaught of popular and financial media seeking to make a sensation out of something that a simple Google search would reveal to be false" sparked hundreds of headlines, but one line in particular ignited some confusion and controversy.
In the blog post, Musk clearly indicated that he requested the NHTSA to conduct an investigation into the company's batteries. But on Tuesday NHTSA administrator David Strickland denied that Musk ever requested such an investigation.
Here's Musk's side of the story:
[W]e have requested that the National Highway Traffic Safety Administration conduct a full investigation as soon as possible into the fire incidents ... Given that the incidence of fires in the Model S is far lower than combustion cars and that there have been no resulting injuries, this did not at first seem like a good use of NHTSA's time compared to the hundreds of gasoline fire deaths per year that warrant their attention.
But if Strickland flatly denies the company ever made such a request, who is telling the truth?
It's likely that the confusion surfaced at some point last Friday when, according to a tweet from Musk, Tesla's VP of regulatory affairs, Jim Chen, invited NHTSA senior staff to conduct a review of the Model S.
On Friday last week, Tesla VP of Regulatory Affairs, Jim Chen, invited NHTSA senior staff to conduct a review of Model S— Elon Musk (@elonmusk) November 19, 2013
Friday also happens to be the day of NHTSA's preliminary analysis resume for an investigation into Tesla's battery fires. Perhaps Musk asked Chen to invite the NHTSA to review the Model S hoping that the NHTSA would open an investigation. In fact, if the NHTSA wasn't already planning on conducting a review on that Friday, it could be argued that the investigation is a result of Musk's persistence.
But does it matter?
So, there may or may not be a recall and Elon Musk may or may not have made an inaccurate claim about the company requesting an investigation from the NHTSA. Is this really necessary information for investors to follow? Sure, these developments are worth keeping an eye on. But none of this noise is worthy of changing an investors underlying thesis for Tesla's long-term prospects.
Yes, Musk has responded aggressively to negative headlines surrounding the company's fires -- maybe even too aggressively. But it's this extreme personality that has helped Musk take Tesla from zero cars ever sold to its current limited rate of sales of more than 5,000 per quarter. It's this edgy determination that will help Tesla eventually bring to market its much anticipated affordable car for the masses.
As I explained recently, investors should keep an eye on developments like these, but they should also remember to keep the noise in perspective and their focus on the big picture items that affect a company's long-term prospects. If anything, the big picture takeaway here is not the investigation -- it's that Musk is as passionate and confident as ever about the future of his company.
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The article Tesla's Questionable Public Relations Attempts originally appeared on Fool.com.Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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