Tesla Stock Enters Panic Mode after Consumer Watchdog Issues Scathing Report

Ann Santiago
February 23, 2019

The Tesla Model 3 is no longer be recommended by Consumer Reports due to a number of owner complaints about the electric sedan. While most owners who responded to the survey are happy with the vehicle, many did report reliability issues.

Model 3 drivers cited glass defects and loose body trim as particular issues with their cars, while Chrysler 300 owners reported problems with the transmission and electronics.

This isn't the first time Tesla has suffered an embarrassing, public downgrade.

"In most cases, reliability issues will undermine satisfaction", said Jake Fisher, senior director of auto testing at Consumer Reports. Consumer Reports said that the auto it purchased for testing exhibited the last of those when a crack appeared in its rear window. "The vast majority of these issues have already been corrected through design and manufacturing improvements, and we are already seeing a significant improvement in our field data".

Tesla Inc.'s (TSLA.O) Model 3 lost a coveted recommendation from Consumer Reports, dropping its brand from the top 10 of the magazine's closely watched annual ranking.

Tesla's stock fell as much as 2 per cent as of 12:50 p.m. Thursday in NY. Musk even went so far as Musk threatening to take Tesla private over Twitter.

The Model 3, which started deliveries in the second half of 2017, was initially denied a recommendation by the magazine a year ago. Others pointed to issues with vehicle paint or trim.

The magazine said owners have complained about issues including loose-fitting exterior parts and defective glass, casting doubt on the Model 3's reliability and costing the vehicle its recommendation. That kind of love-hate relationship isn't uncommon for iconic vehicles with persistent quality issues, such as the Jeep Wrangler and Chevrolet Corvette, he said.

At one point, Tesla added an additional Model 3 assembly line by erecting a permanent tent outside its assembly plant in Fremont, California.

Unfortunately, this latest batch of reported reliability issues are not all easily fixed by over-the-air updates, as Tesla managed to do with the initial braking issue from past year.

It had initially projected a March start for Model 3 deliveries in China - the world's biggest auto market where overall vehicle sales contracted in 2018 for the first time in more than two decades.

Of the 33 brands included in its 2018 survey, Tesla fell to 19th with a score of 66.

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