The shares of Tesla Motors Inc (NASDAQ:TSLA) are trading lower after Consumer Reports pulled its recommendation for the Model S vehicle due to poor reliability.
The stock price of Tesla Motors tumbled more than 8% to $207.87 per share at the time of this writing around 2:57 in the afternoon in New York. The stock traded as low as $202 per share earlier today.
Talk of inflation has been swirling for some time amid all the stimulus that's been pouring into the market and the soaring debt levels in the U.S. The Federal Reserve has said that any inflation that does occur will be temporary, but one hedge fund macro trader says there are plenty of reasons not to Read More
Tesla Model S reliability worse-than-average
Consumer Reported issued a “worse-than-average rating on the predicted reliability of Tesla Model S.
The consumer magazine interviewed1, 400 Model S owners, and they “chronicled an array of detailed and complicated maladies” regarding the electric vehicle’s drivetrain, power equipment, charging equipment and huge iPad-like center console. The Model S owners also expressed complaints about the leaking, rattling and squeaking body and sunroof of the electric vehicle.
Jake Fisher, director of automotive testing at Consumer Reports said, “As the older vehicles are getting up on miles, we are seeing some, where the electric motor needs to be replaced, and the onboard charging system won’t charge the battery.”
He added that Tesla’s newer Model S vehicles are having problems including its door handles and sunroof “not operating properly.”
Problems raise questions about Tesla’s ability to maintain quality
According to Fisher, the defects on the Model S could bring future problems for Tesla’s brand. The issue also raised questions regarding the ability of the electric car manufacturer to maintain/improve the quality of its vehicles.
“Going forward, this poses the question whether they will be able to keep quality up as they increase volume and add models to the mix,” said Fisher.
The electric car manufacturer started delivering its Model X SUV. Tesla is also planning to increase its production capacity next year and aims to launch the Model 3, a less expensive electric car intended for mass market in 2017.
Tesla spokesman Ricardo Reyes said the company is closely communicating with customers to “proactively address issues, and quickly fix problems.” According to him, the company can diagnose and fix most problems through over-the-air software updates.
Reyes said, “In instances when hardware needs to be fixed, we strive to make it painless.” He also noted that Consumer Reports found that customers rated Tesla’s service as “the best in the world.”