Is Tesla's fight with The New York Times over?

Automotive News | February 27, 2013 - 12:01 am EST

LOS ANGELES -- Tesla Motors' CEO Elon Musk has been at war with The New York Times regarding a recent negative review that he claimed was rigged to make the Model S sedan fail.

In an interview Monday with Bloomberg TV, Musk claimed the negative review has cost the company as much as $100 million.

"We did get a lot of cancellations as a result of The New York Times article," Musk said in the Bloomberg interview. "It probably affected us to the tune of tens of millions, if not maybe on the order of $100 million."

The missing millions, Musk quickly corrected, referred more to the market valuation of Tesla Motors -- not the dollar amount of actual canceled orders. As far as the number of actual cancellations, he revised his statement to say "a few hundred."

Might all this finger-pointing and number-tossing be a way for Musk to establish a case for economic loss for Tesla and sue The Times?

Tesla spokeswoman Shanna Hendriks responded via email: "I am unaware of any plans to sue the NYT. We are very focused on correcting the misperception that the NYT story created in the market about how Model S performs in cold weather."

Tesla is no stranger to the courtroom, having sued BBC's "Top Gear" for libel when the histrionic English program televised the rolling away of a Tesla Roadster on a flatbed -- even though the vehicle had not run out of charge, nor was in any way incapacitated. The courts, while sympathetic to Tesla, ruled for the BBC.

Calculating the costs

The initial run of Model S sedans cost around $100,000, but the new batches coming off the line are less-expensive, shorter-range versions. If the average transaction price is about $85,000 for vehicles coming off the line today, a few hundred cancellations would mean a revenue loss of about $25 million. When asked specifically how many orders were canceled as a direct result of the article, Tesla declined comment.

Having journalists review new vehicles is a cost of doing business for automakers, a PR gambit with the promise of a gleaming cover shot (and a Motor Trend Car of the Year award) worth far more than any advertisement. The potential downside is a picture of your crippled car on a flatbed.

That's what happened with The Times' Tesla review.

Despite Elon Musk's complaints, The Times' report was done in "good faith," the newspaper's public editor wrote.

Taken to task

Already, The New York Times' public editor Margaret Sullivan has taken reviewer John Broder to task for "taking what seem to be casual and imprecise notes along the journey" to back up his powerful claim that the Model S was not ready for prime time in cold-weather conditions.

"Did he use good judgment along the way? Not especially. In particular, decisions he made at a crucial juncture -- when he recharged the Model S in Norwich, Conn., a stop forced by the unexpected loss of charge overnight -- were certainly instrumental in this saga's high-drama ending," Sullivan wrote.

Despite her public admonishment of Broder, Sullivan added she is "convinced that [Broder] took on the test drive in good faith." The column remains available on the newspaper's Web site.

Today, Musk dashed out of a speech in Washington, D.C., before he could be asked about future steps against The Times. In a recent Twitter post, Musk expressed feelings of vindication following Sullivan's counterpoint: "Faith in @NYTimes restored."

But, echoing statements he made during the Bloomberg TV interview, Musk also Tweeted: "Revolutions don't happen if you just roll over to the powers that be. Got to fight for what you believe."

Mark Rechtin is West Coast editor of Automotive News.Mark Rechtin is West Coast editor of Automotive News.

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