Moments ago TSLA shares slid following headlines from a Reuters report that the US Auto Safety Agency is probing an issue involving Tesla suspensions:
- U.S. AUTO SAFETY AGENCY LOOKING AT TESLA MODEL S: REUTERS
- TESLA MODEL S PROBE FOCUSED ON REPORTED SUSPENSION ISSUE: RTRS
What's going on here?
As it turns out, and as reported extensively on the Daily Kanban website overnight, not only has there been a chronic issue involving the safety Tesla Model S suspensions, but there are allegations that Elon Musk's company has been actively trying to cover these up.
As the website notes, "where Tesla crosses the line here is not the “crime” itself, but the coverup. If Tesla used a TSB rather than a recall to fix a safety problem, if it has an institutional bias against ordering recalls and if it uses NDAs as a matter of course to prevent owners from reporting defects, this could become the biggest auto safety scandal since the GM ignition switch affair. That’s a lot of “ifs,” but thus far the evidence indicates that these are very real possibilities. Watch this space for further developments in this troubling story."
Here is the full report from the Daily Kanban:
Tesla Suspension Breakage: It’s Not The Crime, It’s The Coverup
For several months now, reports have circulated in comment sections and forum threads about a possible defect in Tesla’s vehicles that may cause suspension control arms to break. Many of those reports appeared to come from a single, highly-motivated and potentially unreliable source, a fact which led many to dismiss them as crankery. But as more reports of suspension failure in Teslas have come in, Daily Kanban has investigated the matter and can now report on this deeply troubling issue.
Our investigation began in earnest upon reading a thread titled “Suspension Problem on Model S” in the Tesla Motors Club forum. The original poster (OP) in that thread described the suspension in his 2013 Model S (with 70,000 miles) failing at relatively low speed, saying the “left front hub assembly separated from the upper control arm.” Images of the broken suspension components showed high levels of rust in the steel ball joint and the OP reported being told by Tesla service center employees that the “ball joint bolt was loose and caused the wear,” which was “not normal.” Because his Tesla was out of warranty, the repair was reportedly sent to Tesla management for consideration.
According to a subsequent post by the OP, Tesla management refused to repair the broken suspension under warranty despite the “not normal” levels of wear reported by the service techs. Then, just days later, the OP reported that Tesla had offered to pay 50% of the $3,100 repair bill in exchange for his signature on a “Goodwill Agreement” which he subsequently posted here (a scan of the stock agreement can be found here). That agreement included the following passage:
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. [Emphasis added]
This offer, to repair a defective part in exchange for a non-disclosure agreement, is unheard of in the auto industry. More troublingly, it represents a potential assault by Tesla Motors on the right of vehicle owners to report defects to the National Highway Traffic Safety Administration’s complaint database, the auto safety regulators sole means of discovering defects independent of the automakers they regulate.
The OP subsequently posted that “Tesla and I have come to terms,” and later wrote “I can not speak as to the agreement that Tesla and I signed. I can only say that this incident was reported to NHTSA and there is an ongoing investigation.” This week the OP confirmed that NHTSA is indeed investigating the defect and that
They said that the were of poor quality and failed prematurely. They are looking for other examples or samples to test, to see if it is a bad batch at the production level or a bad design.
He later posted an email he received from a NHTSA investigator in reply to his question about whether the suspension joints had been tested, which states
Yes, the joints were not good and we are looking for more examples to test.. We are in contact with Tesla requesting more information on these parts and others in the suspension. I will keep you updated …
Daily Kanban has contacted NHTSA asking for confirmation that it is indeed investigating a defect in Tesla’s suspensions and we will post the agency’s response as soon as it arrives. In the meantime, we can not speculate about the nature of this defect beyond pointing out that Tesla itself issued a Technical Service Bulletin (TSB) in March of 2015, which indicates that a “known non-safety-related condition” applied to the front lower control arm of the Tesla Model S. That TSB indicates that “greater free play than expected” can develop in the suspension’s steel ball joints, which can damage the aluminum control arm.
If the issue described in the TSB is what caused the suspension failure described above, it would be a major problem for Tesla Motors. The OP’s excessive ball joint wear should have been a known issue from the TSB issued over a year before. Moreover, if the issue described in the TSB can cause suspension failure, Tesla’s use of a TSB rather than a recall –the legally mandated technique for repairing defects that could affect vehicle safety– was deeply problematic. This is precisely the behavior that GM was discovered to have engaged in during the 2014 ignition switch recall scandal, and in the words of former NHTSA Administrator Joan Claybrook
“Technical-service bulletins have been recall-avoidance devices — there’s no question about that.”
We won’t know whether this is in fact the case until NHTSA makes a statement about the situation, but another troubling detail indicates that Tesla may have consciously evaded a recall during and after the GM ignition scandal. A tweet by Tesla Motors CEO Elon Musk on January 14, 2014 states
“The word ‘recall’ needs to be recalled.”
Musk’s tweet was subsequently deleted, but reference to it lives on at this Bloomberg story by Musk’s authorized biographer Ashlee Vance.
Until NHTSA publicizes the findings of its investigation, the sheer scope of Tesla’s apparent suspension defect won’t be clear. But other reports of suspension breakage are not hard to find, both in the “Suspension Problem on Model S” thread at TMC, elsewhere on that forum or around the internet. A gallery of photos apparently assembled by the hard-working Cassandra in this story shows a disturbing number of wrecked vehicles with broken suspensions. But these photos, like the two reports of Teslas driving off cliffs and other reports of inexplicable crashes, are circumstantial evidence at best. Until experienced investigators perform forensic analyses that can confirm whether suspension failure occurred before any of these crashes, these examples serve only to show the worst case scenario for Tesla.
But the most troubling aspect of this affair is not the defect itself, or even Tesla’s possible use of a TSB instead of a recall. Defects happen to every automaker, and the line between a safety-related and non-safety-related defect can be subtle. The aspect of this story that demands explanation is not the crime, but the cover-up: why did Tesla demand an NDA from an owner in exchange for repairs to a defective vehicle? Even if there is a legitimate reason for such an agreement, Tesla should have made it explicitly clear that the agreement in no way infringes on an owners right to report defects to NHTSA.
Daily Kanban has subsequently found two other examples of Tesla demanding an NDA from owners in exchange for satisfaction regarding its vehicle defects. One involves another OP from the Tesla Motors Club forum, who started a thread called “Out of warranty concerns about Tesla” describing Tesla’s out-of-warranty repair of a variety of problems with his vehicle including “the loss of control and abs, steering, traction etc.” After directly emailing Jerome Guillen, Tesla’s Vice President of worldwide service and deliveries (currently on leave from the company), the OP quickly heard back from Tesla and later reported that extensive repairs had been made in exchange for an NDA. Unlike the OP from the “Suspension Problem” thread, the OP from “Out of warranty concerns” appears to have kept to the terms of the agreement. In any case, the defects he describes certainly seem capable of posing a threat to safety and probably should have been reported to NHTSA’s complaint database.
The third example of this practice comes from a (since-resolved) Better Business Bureau complaint against Tesla (dated 5/20/16), which alleges that the automaker demanded an owner sign an NDA in exchange for repossession of his or her defective Tesla Model X. To wit:
Tesla refuses to make me whole on its repossession of the defective vehicle sold me unless I sign a hush up agreement with $150,000 penalty violation.
Tesla sold me a defective Model X. Tesla then took back possession of the vehicle and cancelled its registration without my knowledge. Tesla is now refusing to make me whole on the monies I am out unless I sign an agreement where I can not report the defects to agencies or others or the repurchase terms. If I violate Tesla says I am liable for $150,000. Tesla now has possession of the Model X and I am not being made whole for what I am out. Vehicle was riddled with defects.
Since Tesla’s NDA forbids disclosure of the agreement itself, it’s entirely possible that there are considerably more than three instances of Tesla using NDAs to prevent the reporting of vehicle defects. In fact, given Tesla’s generally rabid fanbase it’s almost surprising that these three incidents have even come to light on the internet.
If it is indeed Tesla’s policy to demand an NDA for any goodwill out-of-warranty work, or in exchange for making a dissatisfied owner whole, there can be little doubt but that this practice chills defect reporting to NHTSA’s database. Based on this 2015 Inspector General report on NHTSA’s “inadequate data and analysis,” it’s clear that the auto safety regulator relies heavily on owner reporting as a source of data not controlled by automakers themselves. Given these circumstances, any attempt by any automaker to compromise the flow of defect reports represents a serious attack on the agency’s ability to independently regulate auto safety. Daily Kanban has requested comment from NHTSA on Tesla Motors’ apparent use of NDA’s to prevent defect disclosures, and will publish the agency’s statement as soon as we receive it.
A suspension that physically snaps while on the road is a troubling problem for any automaker to face, especially one that has touted its car as the safest ever built (although the 2013 Tesla press release touting this claim appears to have been deleted from the company’s website sometime between December 28 2014 and January 13 2015). But unless NHTSA or other investigators are able to conclusively tie a known defect to driver fatality or injury, the mere existence of a defect makes Tesla no different than any other automaker.
Where Tesla crosses the line here is not the “crime” itself, but the coverup. If Tesla used a TSB rather than a recall to fix a safety problem, if it has an institutional bias against ordering recalls and if it uses NDAs as a matter of course to prevent owners from reporting defects, this could become the biggest auto safety scandal since the GM ignition switch affair. That’s a lot of “ifs,” but thus far the evidence indicates that these are very real possibilities. Watch this space for further developments in this troubling story.
Tesla Motors has not returned requests for comment on this story as of the time of publication.
The post “This Could Be The Biggest Auto Scandal Since The GM Ignition Switch” – Why Tesla Is Probed Over A “Suspension Issue” appeared first on crude-oil.top.