Recently the New York Times published a bad review of Tesla Motors’s Model S sedan, stating that the car failed to meet the standards previously promised by Tesla. Specifically the February 8th article suggested that the Model S failed to meet the 300-mile range promised during a long-haul test drive done in cold weather.

Tesla Says Story is Untrue

So what does Tesla have to say about this damning information? Tesla Motors CEO Elon Musk says the story is fabricated and untrue. He has released scores of data challenging New York Times’ reporter John Broder’s tale of the drive referenced. Musk recently blogged that “The Model S battery never ran out of energy at any time, including when Broder called the flatbed truck”. He also said that the trip’s data log showed an average of 65 to 81 miles per hour; contrary to the 54 miles per hour Broder said the cruise control was set to. The vehicle log also indicated that the car had not been charged past 90% capacity the entire trip and the final charge before pickup was only to 28%.  “Despite narrowly making each leg [of the trip], he charged less and less each time. Why would anyone do that?” Musk reportedly said.

In any event, after a week-long twitter battle between Musk and Broder, both parties have returned to their respective corners of the ring, but not soon enough. Broder’s recounting of the “facts”, true or not had some allegedly damning consequences for Tesla. Since the firestorm Tesla stock shares have fallen from 13 percent ($39.48 to $34.38 since February 7th), an additional 4.8 percent just yesterday. In addition, Musk told Bloomberg television that a few hundred cancellations were also made shortly after the article was published. The Model S vehicles are priced starting at $72,400, multiply that by 300 (the few hundred cancellations alleged by Musk), equals approximately a $22 million loss in expected revenue. Ouch!

Tesla Stock Down

Interestingly enough, the day prior to the story being published, Tesla stock went from $39.48 the day prior to $37.04 on February 15; a 6.2 percent decrease resulting in a $278 million loss for Tesla. Subsequently Tesla stock continued to fall another 8.8 percent following the company’s reported $396 million loss for the year (56 percent less than the year prior). Perhaps there are some other causes to attribute the fall in stock price?

So will we be seeing Tesla Motors vs. New York Times in the near future? Well, given the various reasons above, it will be difficult to prove that the New York Times article was the cause of the company’s losses. There is no doubt that the article injected some uncertainty surrounding Tesla and its Model S, but as for a defamation claim….

Defamation – Does Tesla Have a Case?

Although it has been some time since I sat through a torts lecture, I wondered whether Tesla might have a claim for defamation against New York Times or Broder. To establish defamation, there are generally four required elements that must be met: (1) a false statement claiming to be fact concerning another person or entity; (2) the statement about the person or entity must be communicated to a third party, (3) the person making the statement knew it was false or should have known it was false; and (4) some harm caused to the person or entity who is the subject of the statement.

Given the facts established above, we know that Broder wrote a statement (or several) about Tesla that was purportedly false, which he intentionally published to the general public. The statements made were arguably intentional, thus attributing fault to Broder and NYT. Finally, as evidenced by the drop in stock at the very least, coupled with the cancellations of a few hundred orders, there was a harm caused to Tesla. Now, this juvenile analysis might suffice on a law school exam…barely, but Tesla would have to do much more than this. Assuming there was sufficient proof to link the harm to the article, then perhaps there is a viable claim here. Though it should be noted that this isn’t the first time Tesla’s cars have come under scrutiny or sought legal action as a result. In 2008, the popular BBC automotive show “Top Gear” showcased Tesla, specifically when the car ran out of battery. Some comments were made by the show’s host Jeremy Clarkson which Tesla viewed as false. Later (on two occasions) Tesla did take legal action, filing suit for libel but the claims were dismissed (twice).

We shall see what comes of this dispute; until then other reporters have undertaken the same long trek as Broder and we await their results. Perhaps Broder was correct and the truth will come out, or perhaps he maliciously fabricated the entire tale and Tesla has a claim after all? Only time will tell!

Click to learn more about defamation.

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