Trouble for Tesla: Why Consumer Reports Says Its Model S Was ‘Undriveable’

Trouble for Tesla: Why Consumer Reports Says Its Model S Was ‘Undriveable’

The Tesla logo is seen on a Tesla Model S P85D outside the company's headquarters in Palo Alto, California April 30, 2015. REUTERS/Elijah Nouvelage
© Elijah Nouvelage / Reuters
By Jonathan Berr

Consumer Reports in 2013 gave the Telsa Model S the highest rating of any vehicle in its history. This year’s review did not go as well for Elon Musk’s company.

The venerable magazine had to delay testing of the company’s newest model because its drivers couldn’t open the doors on the $127,000 sedan, temporarily making the car “undriveable.”

The door handles on the Model S P85 retract automatically and lay flush against the vehicle when they are not in use. Once the vehicle receives a signal from the key fob, the handles move to allow people to grip them. Unfortunately, the door handles stopped working after Consumer Reports testers had the vehicle for 27 days and had driven just over 2,300 miles.

That malfunction caused other problems, the magazine says: “[S]ignificantly, the car wouldn't stay in Drive, perhaps misinterpreting that the door was open due to the issue with the door handle.”

Consumer Reports’ troubles aren’t unique. The non-profit’s car reliability survey found that the Model S has had a far higher than average number of problems with doors, locks and latches, according to the organization’s website.

The testing experience wasn’t all bad, though, because the automaker’s customer service is top notch. A technician was sent to the Consumer Reports Auto Test Center the morning after the problem was reported and quickly diagnosed the problem.

“Our car needed a new door-handle control module — the part inside the door itself that includes the electronic sensors and motors to operate the door handle and open the door,” Consumer Reports says.  “The whole repair took about two hours and was covered under the warranty.”

Eric Lyman, vice president of industry insights at TrueCar, told The Fiscal Times that the speed in which Tesla addressed that issue will earn it more kudos from customers who have seen carmakers drag their feet in making needed repairs.  The door handle issue isn’t a big deal, he said.

“Telsa is still a relatively new automaker,” he said. “The reality is that we see this kind of thing happen all of the time. This is pretty normal in the course of business in the auto industry.”

The timing of the mishap comes as Telsa is struggling to repair its credibility with Wall Street after the electric vehicle maker’s disappointing earnings performance.  Bloomberg News reported last week that the Palo Alto, Calif.-based company might have to raise money because of what one analyst described as its “eye watering” cash burn rate, or else it might run out of money in the next three quarters.

The electric vehicle maker also is facing increased competition from more established rivals. General Motors (GM), for instance, recently unveiled a Chevrolet Bolt concept car that is set to hit the market in 2017 with a projected price of about $30,000 and a battery range of 200 miles. The next generation Nissan Leaf, another electric vehicle, will hit the market at about the same time.

For now, Tesla’s biggest challenge may in convincing consumers to buy electric vehicles while oil remains cheap.

Quote of the Day: A Big Hurdle for the Tax Cuts

Reuters/Joshua Roberts
By The Fiscal Times Staff

“He goes in and campaigns on an issue, and the challenge is he then talks about executing drug dealers. Why do you think the press is going to cover the tax cuts if you’ve given them the much more exciting issue?”

-- Grover Norquist, president of tax-cutting advocacy group Americans for Tax Reform, on President Trump’s failure to sell the tax law.

The Obamacare Mandate That Could Produce $12 Billion in Fines in 2018

FILE PHOTO: A sign on an insurance store advertises Obamacare in San Ysidro
MIKE BLAKE
By Michael Rainey

Republicans effectively eliminated the individual Obamacare mandate in the tax package signed late last year. Although the new regulation reducing the mandate penalty to zero doesn’t take effect until 2019, President Trump has cited the rule change as a victory over the health law so many conservatives oppose. “Essentially, we are getting rid of Obamacare. Some people would say, essentially, we have gotten rid of it," Trump told a crowd in Michigan two weeks ago.

However, many parts of the Affordable Care Act are still in effect and will continue to operate even after the individual mandate is eliminated in 2019.

In particular, the employer mandate, which requires companies with more than 50 employees to offer health benefits or face fine of roughly $2,000 per worker, will continue to play a significant role in the Obamacare system. The Congressional Budget Office estimates that the mandate will produce more than $12 billion in fines in 2018 alone.

Some conservative groups are pushing lawmakers to stop enforcing the employer mandate, but the IRS is still working to enforce the law. According to The New York Times Monday, the IRS is sending out notices to more than 30,000 businesses that have failed to comply. 

Chart of the Day: It’s Still the Economy, Stupid

iStockphoto
By Yuval Rosenberg

Security may be the top policy issue for Republican voters, but the economy is the top concern for Democrats, independents and voters overall, according to Morning Consult’s latest polling on the midterm elections. Health care is third on the list, followed by “seniors’ issues.” The results are based on surveys with more than 275,000 registered U.S. voters from February 1 to April 30.

Number of the Day: $13 Billion

A congressional aide places a placard on a podium for the House Republican's legislation to overhaul the tax code on Capitol Hill in Washington
JOSHUA ROBERTS/Reuters
By The Fiscal Times Staff

An analysis by Bloomberg finds that the roughly 180 companies in the S&P 500 that have reported earnings for the first three months of the year saved almost $13 billion thanks to the corporate tax cut enacted late last year. Those companies’ effective tax rate dropped by more than 6 percentage points on average. About a third of the tax savings went to 44 financial firms.

How a Florida Doctor with Social Ties to Trump Delayed a $16B Billion VA Project

McDonald delivers an apology, for recent misstatements about his military record, to reporters outside VA headquarters in Washington
REUTERS/Jonathan Ernst
By The Fiscal Times Staff

A West Palm Beach doctor who is friends with Ike Perlmutter, the chairman of Marvel Entertainment and an informal adviser to President Trump on veterans’ issues, has held up “the biggest health information technology project in history — the transformation of the VA’s digital records system,” Politico’s Arthur Allen reports. Dr. Bruce Moskowitz “objected to the $16 billion Department of Veterans Affairs project because he doesn’t like the Cerner Corp. software he uses at two Florida hospitals, according to four former and current senior VA officials. Cerner technology is a cornerstone of the VA project. … Moskowitz’s concerns effectively delayed the agreement for months, the sources said.” Read the full story.