Tesla vs. The New York Times: A War of Words Drags on the Company’s Shares

Michael Teague |

A rather bitter exchange of words was unleashed last week when The New York Times published its article about the efficacy of Tesla Motors’ (TSLA) new Model S all-electric vehicle on Feb. 8.  The article, titled Stalled Out on the Electric Highway, detailed one journalist’s experience testing out the battery power of the new vehicle on a stretch of the East Coast between Washington and Boston, and was originally conceived as a follow-up to a prior (successful) test conducted last year on the West Coast.

With brand new charging stations recently built along Interstate 95 in Newark, Delaware, and Milford, Connecticut, the test-drive was expected to show much the same result that was achieved last year in California.  The new Tesla Model S’s battery has an approximate distance of 265 miles before it needs recharging,  and the new stations, built and operated entirely at the company’s expense, are each under 200 miles apart.  Furthermore the company boasts that their new “super-charging stations” can refill the Model-S battery completely after about an hour (with half an hour providing enough juice to make it about 150 miles).



The results, however, were not impressive, at least not by the above parameters. The author of the article, John Broder, was clearly enamored of the car’s design and hi-tech features. He called it a “technological wonder”, praising its aesthetic qualities, and citing the many awards won by the automobile last year, before elaborating on the rather less impressive details of his voyage. The car was consistently short of its stated mileage range, and below 30-degree weather the machine itself, as well as Tesla representatives who were contacted for advice during the experience, advised Broder to turn off the heater and drive slower, before the car simply shut off by itself in Branford, Connecticut.

While Broder’s article was by no means a hit-piece, Tesla did not take it well and in the ensuing melee has accused the journalist of trying to destroy the car's and the company’s reputation. It should be noted that some of the mileage data given by Broder has been subsequently found to contain inaccuracies, but the major problem with the car’s performance seems to have to do with freezing temperatures that were not a factor in last year’s test-drive on the West Coast (Broder mentioned at several points in his article that the East Coast winter was completely unlike the rather more optimal conditions in which his test drive from last year was conducted).

Tesla’s shares closed at $39.48 on Feb. 7, a day before the article published. Since then, the company's stock has been slowly struggling, and as of Feb. 15, shares closed at $37.04, a drop of 6.18 percent since the article appeared. Subsequent test-runs along Broder’s original trajectory have provided some counter-data, but there is no doubt that the company has taken a hit, essentially for allowing their first test-run to be conducted by a journalist writing for the country’s paper of record. The company and Broder have exchanged several rebuttals in the nearly two weeks since the original story appeared.

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Companies

Symbol Name Price Change % Volume
TSLA Tesla Motors Inc. 328.91 13.78 4.37 7,936,124 Trade
ITIC Investors Title Company 190.99 0.39 0.20 1,876 Trade

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