Wealth Blog

Still powerful press

PUBLISHED : Thursday, 07 March, 2013, 9:24am
UPDATED : Thursday, 07 March, 2013, 9:24am

Just when you think people, especially busy wealthy people, don’t read newspapers anymore, a story like the recent Tesla saga comes along to make you realise that they still do.

I’m referring to the February 8 New York Times review of the Tesla Model S sedan, in which motoring journalist John Broder drove the car from Washington DC to Boston on a cold winter’s day. He found the econ-friendly car’s battery failed to live up to his expectations, performing less well than the maker promised.

Tesla Motors’ chief executive Elon Musk – there’s a name to conjure with – has lost about US$100 million in sales and cancelled orders. “We have seen a few hundred cancellations that are due to the New York Times pieces, and slightly lower demand in the Northeast region,” Musk reportedly told Reuters. It seems to drop $100 million in lost sales; Tesla would have had to crop 1,000 car sales, assuming each had a price tag of plus or minus $100,000. Since Broder’s yarn, Tesla shares have dropped 13 per cent, which is between $100 million and $200 million. Tesla’s drop in market value was due to Broder’s article, Musk claimed.

The model S is the company’s second stab at an electric car and is their follow-up to their popular sporty two-person roadster. The newcomer S has attracted a lot of attention as wealthy and style conscious environmentally-friendly drivers hunt for a viable classy alternative to their petrol-fired vehicles. Musk launched an energetic public relations offensive and dismissed Broker’s review, calling it a “fake” on Twitter and brandishing contradictory data logs to disprove Broker’s allegation. Broker struck back in the Times a few days later, saying he had faked nothing. While Times Public Editor Margaret Sullivan conceded that Broker took “casual and imprecise notes”, of his test drive and did not use good judgment, but noted that Musk’s data logs on the car were “sometimes quite misleading.”

The moral of the story, if there is one, is that rich people still read newspapers. But if you want to be sure of the real range of your expensive but environmentally trendy Tesla, best take it for a battery-knackering test spin yourself.