‘Consumer Reports’ yanks Tesla recommendation

21 Oct 2015 | Author: | No comments yet »

‘Consumer Reports’ yanks Tesla recommendation.

The influential consumer magazine handed the luxury car a “worse-than-average” rating in its annual report on the predicted reliability of new vehicles.

Sony Corp. agreed to pay as much as $8 million to settle claims from employees over the theft of their personal information in a computer hack linked to last year’s release of the movie “The Interview.” U.S. officials have blamed North Korean hackers angered over the Seth Rogen and James Franco comedy for the attack, which was revealed in November.PALO ALTO (CBS SF) – Shares of Palo Alto-based electric car maker Tesla Motors dropped nearly 7 percent on Tuesday, after Consumer Reports raised questions about reliability of the Model S sedan.Consumer Reports dropped its recommendation of the Tesla Model S after owners of the electric luxury sedan complained of a series of problems including squeaking noises, motors that needed to be changed and issues with the car’s automatic door handles.Tesla Motors Inc., the Silicon Valley carmaker whose market value is greater than those of large global players like Fiat Chrysler Automobiles NV and France’s Peugeot SA, is starting to experience the growing pains that come from producing more cars. The breach exposed Hollywood secrets, destroyed company data and caused the movie studio to initially cancel the release of “The Interview,” which was about a fictional plot to assassinate North Korea’s leader, Kim Jong-Un.

The company’s flagship Model S electric car lost its recommendation from Consumer Reports after owners complained about quality issues as mundane as a squeaky sunroof to major issues like the electric motor needing to be replaced, the publication said in its forthcoming December issue. Sony Pictures Entertainment, the Tokyo-based company’s U.S. movie studio, in June lost a bid to dismiss allegations that it was negligent in not maintaining adequate security to stop hackers from getting into the company’s computer systems and releasing employee salaries, worker health data, racially tinged e-mail banter and other sensitive information. Consumer Reports surveyed 1,400 Model S owners “who chronicled an array of detailed and complicated maladies” with the drivetrain, power equipment, charging equipment and giant iPad-like center console.

Former employees alleged the company knew it had inadequate measures in place to protect its data and suffered breaches twice before last year’s attack. The change is a significant setback for Tesla, which has earned a devoted following in part because of the glowing reviews from publications like Consumer Reports. Although the magazine in August called the performance version the best car it has ever tested, predicted reliability is a new sore spot for the electric car. Door handles continue to be an issue.” Fisher said the flaws could signal future problems for the brand, which plans to roughly double production next year.

Some ex-employees claimed in July that identity thieves had attempted to use their credit cards and were trying to sell their personal data on black market websites. While owners reported problems, they also told the magazine that Tesla has been prompt in fixing issues and that 97 percent said they would buy their cars again.

The rating is a step below average, but not as bad as it could be, which is “much worse than average.” Any car that falls below average on reliability can’t be recommended. It has just begun deliveries of a second vehicle, the Model X electric crossover, and intends to introduce the Model 3, a smaller, less expensive electric car, in 2017. “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,” Fisher said. Sony argued the case wasn’t suited to proceed as a class action and told the judge that none of the lead plaintiffs in the case had suffered financial loss as a result of the hacks.

When car companies add all-new models and boost production, problems often arise and it can take time to get things fixed at the factory, Fisher said. The group gives the car the highest marks in a wide array of tests of drivability and efficiency. (The Model S can accelerate from 0 to 60 miles per hour in 3.5 seconds, and is “explosively quick,” the group said.) “On our test track, the car is second to none,” said Jake Fisher, Consumer Reports’ director of automotive testing. “But when we talk about reliability, we are talking about things that break. Reached for comment, Tesla officials noted that respondents to the Consumer Reports survey lauded the automaker’s service and loyalty as the best in the world. While wealthy Tesla owners are likely to have other cars, making problems less of a hassle, if Tesla reaches its 2020 goal of selling several hundred thousand Model 3s annually, buyers might not be as forgiving, Fisher said. Hopefully, they will learn from them.” In response to the report, Tesla said in a statement: “Close communication with our customers enables Tesla to receive input, proactively address issues and quickly fix problems.

The first buyers of a new model are often hard-core enthusiasts and may have been less critical of any flaws, said Sandy Munro, owner of engineering consulting firm Munro & Associates in Auburn Hills, Michigan. Fisher says the magazine isn’t backing down from its test results. “The rating we gave was based on how the car performed in testing, and that still stands. Consumer Reports in August lauded the car’s combination of performance, luxury and efficiency when its tests resulted in a score of 103 on the publication’s 100-point scale. It’s not the first time we’ve seen something like that.” He says Chevrolet Corvette sports car also performed well in testing, but poorly on reliability.

The report pointed out that most of the problems fell under the company’s 50,000-mile, four-year warranty and were corrected at no cost to the car owners. In instances when hardware needs to be fixed, we strive to make it painless.” Bearish sentiment has been growing since Tesla delivered the first six Model Xs at a Sept. 29 event in Fremont, California. Tesla’s share decline contributed to a drop of $562 million, or 5 percent, in Chief Executive Officer Elon Musk’s net worth on Tuesday, according to the Bloomberg Billionaires Index. Brauer does not expect the report to affect sales in the short term, the issue of reliability is going to be critical to Tesla’s ability to expand into the mass market, where buyers will be less willing to gloss over such issues.

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