Elon Musk Says New York Times Cost Tesla $100 Million

February 26, 2013

In an interview posted yesterday to Bloomberg, Elon Musk, the CEO of electric car company Tesla, reflects on the controversy surrounding a recent New York Times article about the Tesla Model S. When all the dust had settled, Musk claims that the Gray Lady cost Tesla hundreds of cancelled orders and up to $100 million in lost revenue and stock value.

And that's not all. In just the first 90 seconds of the six-minute video embedded above, Musk makes a number of accusations and defenses. Just for fun, let's play a little game of "he said, we said":

He said: The data from John Broder's test drive for the New York Times "doesn't correlate at all to the article that was written". 

We said: Yes and no. While there do appear to be some discrepancies between Broder's initial report and Tesla's logs, Broder offers a point-by-point rebuttal of Musk's claims in a follow-up article. From where we sit, Broder's responses seem pretty reasonable, while Musk's complaints border on the irrational, as though he wanted to micromanage Broder's entire drive.

Ultimately, the New York Times questioned the precision of Broder's record-keeping, but not his integrity as a journalist. (Broder is not, after all, a log-keeping machine like the Model S.) And in Tesla's defense, it's worth noting that another reviewer completed the same Washington, D.C.-to-Boston test drive after Broder, arriving at his destination without incident

He said: People told him, "It doesn't matter if you're right or wrong, you don't battle the New York Times", to which Musk responded, "To hell with that. I'd rather tell the truth and suffer the consequences..."

We said: We certainly encourage Musk to counter inaccuracies in reporting -- and he should be somewhat wary, since there are more than a few politicians, auto journalists, and others who neither like him nor his product. (Even Broder has been critical of electric cars in the past, which was a valid point for Musk to raise in his initial attacks.) But to see a young, enthusiastic billionaire of Musk's means setting himself up as David to the New York Times' Goliath seems slightly disingenuous. 

He said: Musk doesn't believe this is the end of John Broder's career, "I don't even think necessarily he should be fired".

We said: That's more than a little presumptuous, given that there's apparently a good bit of truth in Broder's reporting. Musk is working hard to make Broder sound like a wash-up, while at the same time building sympathy for himself because, hey, he doesn't want to see anyone lose a job. That's what we'd call "spin". 

He said: The New York Times article cost Tesla up to $100 million in lost orders and stock value.

We said: This probably isn't the most believable financial report we've ever heard. Apart from Musk's unconvincing tone of voice, it's important to note that Broder's article ran on Friday, February 8. Tesla stock closed that day at $39.24, one of the few times it's sat above $39. The next trading day, Tesla's stock opened down at $37.98 but finished up, at $38.42. The following week, Tesla's stock price edged above $39 once more.

In fact, it wasn't until last week -- well after Broder's report was published -- that Tesla's stock really began to fall. (Yesterday it closed at $34.38.) It's worth noting that the stock's price began to plummet around the 21st, when Tesla revealed its disappointing Q4 results.

He said: The New York Times resulted in many cancellations of Model S orders -- "probably a few hundred".

We said: We wouldn't be surprised if there were, in fact, some cancellations after Broder's article was published. But a "few hundred"? (Listen to the clip: even Musk adds a question mark after "hundred".) Since this isn't likely the sort of thing that Tesla will ever make public unless it brings a lawsuit against Broder and the New York Times, we'll just have to trust his assessment. Or not.

However, an analysis of Tesla's financials indicate that there were a significant number of cancellations in Q4 of 2012 -- around 1,500 by Tesla's estimation. That doesn't mean that Musk is necessarily wrong in claiming that Broder's article caused cancellations; however, it would appear that the trend of cancellations began well before Broder's article arrived in print. Which means that linking cancellations directly to the New York Times is difficult, indeed. 

OUR TAKE

Musk is awfully good at playing the martyr. He could've come out swinging more aggressively, but no one likes to feel sorry for the mean guy (cf. Donald Trump). Instead, he hit a tone somewhere between "fire that reporter!" and "oh, woe is me!".

In the end, Musk's interview demonstrates that he's a good spokesperson for his own products: he's not just passionate and knowledgeable, he's also able to cast doubt on naysayers without calling them liars, in so many words. Whether or not Broder's assessment of the Model S was 100% accurate, we have a feeling Tesla will be around for a while to come, so long as Musk remains onboard.  

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