Tesla Faces More Heat for Safety Claims

Tesla (TSLA) has received a subpoena from the NHTSA (National Highway Traffic Safety Administration). CEO Elon Musk faced heat last year for his tweets about the Model 3 and taking Tesla private.

NHTSA subpoena

Tesla has received a subpoena regarding its Model 3 safety claims from the NHTSA, which also sent Musk a cease and desist letter last year about safety claims. The NHTSA referred to a blog post Tesla wrote last year. It said, “Based on the advanced architecture of Model S and Model X, which were previously found by the National Highway Traffic Safety Administration (NHTSA) to have the lowest and second lowest probabilities of injury of all cars ever tested, we engineered Model 3 to be the safest car ever built. Now, not only has Model 3 achieved a perfect 5-star safety rating in every category and sub-category, but NHTSA’s tests also show that it has the lowest probability of injury of all cars the safety agency has ever tested.”

The NHTSA and Tesla

PlainSite has released the documents regarding the NHTSA conversation with Tesla. The NHTSA noted that the company’s use of the NHTSA five-star rating is not consistent with NHTSA’s rules. Tesla disagreed, stating that its “blog statements are entirely based on actual test results and NHTSA’s own calculations for determining relative risk of injury and probability of injury.”

Implications of the subpoena

Bloomberg reported that independent auto-safety consultant Allan Kam said, “If it’s a subpoena, it’s known to get quicker attention from the manufacturer generally, and it’s not a routine matter.” He added, “It’s dealt with in a more prompt way and in a more serious way.” Kam is a former senior enforcement attorney at the NHTSA. The NHTSA has also referred the matter to FTC’s Bureau of Consumer Protection “to investigate whether these statements constitute unfair or deceptive acts or practices.”

The NHTSA said that its rating system guidelines don’t support the use of terms such as “safest,” “perfect,” and “best-in-class.” In its referral program, Tesla says that it “makes the safest cars in the world according to US government testing.” Tesla also faced heat when it said its Model S had a 5.4-star rating. The NHTSA’s ratings don’t go beyond 5.0. In its letter to Musk, the NHTSA said, “This is not the first time that Tesla has disregarded the guidelines in a manner that may lead to consumer confusion and give Tesla an unfair market advantage.”

Not the first subpoena for Tesla

Tesla was also subpoenaed over Musk’s Model 3 production claims. The CEO also got into trouble with the SEC (US Securities and Exchange Commission) over tweeting about taking Tesla private. To settle with the SEC, Musk had to leave his position as Tesla’s chairman. Meanwhile, Musk has tweeted about solar roof production, potentially violating the SEC settlement.

Other energy products

Automotive sales account for most of Tesla’s revenue. However, the company is also focusing on energy products. Tesla launched its utility-grade Megapack battery last month, and is ramping up its solar roof production. Its is reportedly planning to install a solar roof at its Fremont facility.