Tesla denies Model S problems and changes driver agreement to satisfy regulators

By Alex Schiffer

June 10, 2016 5:41 PM PT

Tesla Motors Inc., the auto industry’s enfant terrible, found itself in a tussle with federal safety regulators, a car blogger and a driver over potential problems with its mainstay electric sedan.

The company fired back at allegations of suspension problems on its Model S and disputed claims that it asked customers to sign agreements not to talk to federal regulators.

However, Bloomberg reported Friday that the National Highway Traffic Safety Administration said Tesla had revised its “Goodwill Agreements” to make clear that customers were free to report safety concerns to regulators.

The agency said Thursday that it was “examining a potential suspension issue on the Tesla Model S, and is seeking additional information from vehicle owners and the company.”

The Palo Alto-based electric car company had posted on its website a statement saying there are no safety defects with the car and that it has cooperated fully with NHTSA since the agency inquired about the car’s suspensions on April 20.

Late Friday, Tesla Chief Executive Elon Musk tweeted that “NHTSA confirmed today that they found no safety concern with the Model S suspension and have no further need for data from us on this matter.” NHTSA was unavailable to comment.

Tesla said that because it owns all its service centers, it’s aware of every incident or repair.

“Whenever there is even a potential issue with one of those parts, we investigate fully,” Tesla said. “This, combined with extensive durability testing, gives us high confidence in our suspensions.”

Tesla said the car at the root of the allegations experienced abnormal rust in its suspension ball joint, something the company has never seen before.

On Thursday, NHTSA indicated that some owners had been asked to sign nondisclosure agreements about their concerns, which the agency called “troublesome.”

A driver on the Tesla Motors Club online forum posted a legal document titled “Goodwill Agreement & Release” stating, among other things, that in return for the company providing parts, service and other compensation the signer agrees “to keep confidential our provision of the Goodwill, the terms of this agreement and the incidents or claims leading or relating” to it.

Tesla denied the suggestion that it prevented customers from speaking with government agencies, calling the claim “preposterous.” Nonetheless, it said it would review the agreement language.

Tesla said it often picks up the tab on repairs that aren’t covered under its warranty.

“When this happens, we sometimes ask our customers to sign a ‘Goodwill Agreement,’ ” Tesla said. “The basic point is to ensure that Tesla doesn’t do a good deed, only to have that used against us in court for further gain.”

Michelle Krebs, a senior analyst for AutoTrader, said that if other such agreements exist in the auto industry, they aren’t common practice.

“Tesla is doing things its own way on a lot of fronts,” she said. “It’s not using the franchise dealer system, it’s selling to people directly. It’s sort of challenging traditional practices in the industry. Whether it’s appropriate, that’s to be determined.”

Edward Niedermeyer, the blog poster who initiated the complaints on the Model S suspension, took to Twitter to reply to Tesla and directly call out company CEO Musk.

Tesla said the car, owned by Peter Cordaro, 61, of Connellsville, Pa., has more than 70,000 miles on it and needed two tow trucks to take it to the service center, one to get it from the dirt road he lives on to the highway, and another to take it from the highway to the service center.

Cordaro told The Times on Friday that he was “appalled” at Tesla’s response and that its reporting of the situation was inaccurate.

“I can’t believe Tesla would make such an outrageous statement that I live on a dirt road when all they had to do was Google Earth my address which they certainly have in their system and see that I live on an asphalt road in the city of Collinsville,” he said. “Nowhere going to or from my house is there a dirt road by my house.”

A Google Earth search of Cordaro’s address by The Times confirmed that he lives on an asphalt road and that it appears there are no dirt roads nearby.

Cordaro said he’s driven his car on dirt roads at most 10 times in the three years he’s had it. He also added that Tesla’s description of its goodwill agreement, which he did sign, is “accurate.”

Tesla’s stock fell Friday, closing down $10.57 to $218.79, or 4.6%.

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UPDATES:

1:29 p.m.: This article has been updated with more details.

3:42 p.m.: This article has been updated to include a report that Tesla has changed its driver agreements.

5:41 p.m.: This article has been updated with a tweet from Elon Musk.

The article was originally published at 8:19 a.m.