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CNBC

Tesla denies suspension safety issue and ‘preposterous’ gagging order claims

Complainant whose Model S suspension was damaged travelling down a steep hill claims he was asked to sign a confidential contract

PUBLISHED : Friday, 10 June, 2016, 5:39pm
UPDATED : Friday, 10 June, 2016, 6:02pm

Tesla has denied claims that there were safety defects in the suspension of its Model S and Model X cars, angrily refuting "preposterous" allegations that it made customers sign contracts forbidding them to talk to regulators.

The comments came after a blog called the "Daily Kanban" claimed it investigated a complaint on an unofficial forum. It came from a member called "gpcordaro" who said that he was driving down a steep hill and "heard a snap". After stopping the car he found that part of the suspension system had broken. The user contacted Tesla who said they could not cover it under warranty, saying that it was normal wear and tear.

In a subsequent post, "gpcordaro" said that Tesla sent him a "Goodwill Agreement" to sign in exchange for a 50 per cent discount on the repairs and posted a screenshot of the contract.

According to "gpcordaro", part of the contract said:

"You agree to keep confidential our provision of the Goodwill, the terms of this agreement and the incidents or claims leading or related to our provision of the Goodwill."

The forum user then posted again saying that he had reported the issue to the National Highway Traffic Safety Administration (NHTSA) and claimed the regulator wrote back saying that the suspension parts "were of poor quality and failed prematurely". A follow up email allegedly from the NHTSA said that they were "looking for more examples to test" and were in contact with Tesla.

On Thursday, Bryan Thomas, a spokesperson for the agency said in a public statement:

"The agency immediately informed Tesla that any language implying that consumers should not contact the agency regarding safety concerns is unacceptable, and NHTSA expects Tesla to eliminate any such language. Tesla representatives told NHTSA that it was not their intention to dissuade consumers from contacting the agency."

The regulator called Tesla's agreement "troublesome."

Not long after, Tesla denied all allegations. In a blog post late Thursday night, the electric car maker, led by Elon Musk, said that there is no safety defect with the suspension in either the Model S or Model X. The blog addressed the specific example of "gpcordaro" and said it was an "unusual case".

"With respect to the car that is discussed in the blog post that led to yesterday's news…the suspension ball joint experienced very abnormal rust. We haven't seen this on any other car, suggesting a very unusual use case. The car had over 70,000 miles on it and its owner lives down such a long dirt road that it required two tow trucks to retrieve the car. (One to get the car to the highway and one to get it from the highway to the service center.) When we got the car, it was caked in dirt."

Secondly, Tesla said that the NHTSA had not opened any investigation and hadn't even started a so-called "preliminary evaluation", which is the "lowest form of formal investigatory work it does". The car maker said on April 20 the regulator asked about its suspension as part of a "routine screening" and on April 30, Tesla complied.

"NHTSA has since told us that we have cooperated fully and that no further information is needed. Neither before nor after this information was provided has NHTSA identified any safety issue with Tesla's suspensions. This can be confirmed with NHTSA," Tesla said.

And in regards to the non-disclosure agreement, Tesla said that it would never ask a customer to sign a document to prevent them from talking to NHTSA or any other government agency", calling such claims "preposterous".

Tesla said that if a customer tells it that something went wrong with the car, the company covers it even if the problem was not caused by the vehicle. In this situation, the U.S. firm discounts or conducts the repair for free, and in this situation it does ask customers to sign a "Goodwill Agreement", but this is "rare".

"The basic point is to ensure that Tesla doesn't do a good deed, only to have that used against us in court for further gain," Tesla said, but added that it would work with the authorities to see if it "can handle it differently".

"This agreement never even comes close to mentioning NHTSA or the government and it has nothing to do with trying to stop someone from communicating with NHTSA or the government about our cars. We have absolutely no desire to do something like that. It is deeply ironic that the only customer who apparently believes that this document prevents him from talking to NHTSA is also the same one who talked to NHTSA. If our agreement was meant to prevent that, it obviously wasn't very good."

And Tesla didn't stop there. The blog post continued and focused on the author the original blog post – a person named Edward Niedermeyer – noting that it's not the first time he has "caused negative and incorrect news to be written about Tesla".

"This is the same gentle soul who previously wrote a blog titled 'Tesla Death Watch', which starting on May 19, 2008 was counting the days until Tesla's death. It has now been 2,944 days. We just checked our pulse and, much to his chagrin, appear to be alive. It is probably wise to take Mr. Niedermayer's (sic) words with at least a small grain of salt," the blog post said.

It questioned Niedermeyer's motivation and if he had some financial gain by causing a fall in Tesla's share price, with the blog adding that there are "several billion dollars in short sale bets".

Shortly after Tesla's blog, Niedermeyer tweeted his response, saying that Tesla had spelt his name wrong, that he didn't start the "Tesla Death Watch" blog, and that he "doesn't play the market".

Tesla sold over 25,000 Model S cars in 2015 and its next vehicle, the Model 3, already has a large stock of orders. But it's not the first time concerns have been raised about the safety of its vehicles. Tesla recalled the Model X SUV over issues with the back seats.