Reports of premature suspension failures for the Tesla Model S have led to allegations of a “coverup,” and federal regulators are reportedly looking into it.
At issue has been aluminum and steel control arms that have reportedly worn out much too soon, with potential to suddenly fail.
According to a report by the Daily Kanban, Tesla has allegedly resisted fixing these under warranty when wear was deemed “not normal” by Tesla service techs. It may also have sought to sidestep a general recall, and if it’s alleged that if it does choose to do anything about what may be a known problem for a persistent owner, it’s asked owners to sign non disclosure agreements.
If these allegations are true, it’s being suggested the magnitude of the unethical behavior could be likened to how GM covered up its ignition switch defect on an institutional policy basis – albeit well before loss of life that resulted after years of GM going undetected.
The Daily Kanban reports the issue is traced to threads accompanied by photo evidence and reprinted communications from Tesla posted on the Tesla Motors Club Forum. It also reports that the National Highway Transportation Safety Administration (NHTSA) has confirmed something is not right.
“They said that the were of poor quality and failed prematurely,” said a TMC poster. “They are looking for other examples or samples to test, to see if it is a bad batch at the production level or a bad design.”
At this juncture much is up in the air, however, as neither NHTSA nor Tesla have replied to the Daily Kanban as it continues its investigation.
The publication said it went to print after initially holding back on reports it’s heard for months because it suspected prior sources, including a notorious lemon law attorney.
Now with owners and Tesla fans forking over evidence of the automaker’s possible squirming around the law or at least proper ethical behavior, the news of where things stand at this point is being released, says the Daily Kanban.
One bit of proof was a reprinted non-disclosure agreement by TMC forum member which could constitute a thwarting of federal processes.
The poster described his 2013 Model S with 70,000 miles on it experiencing a suspension failure at relatively low speed.
A suspension failure at high speed could have had greater consequences, and in any event the poster said the “left front hub assembly separated from the upper control arm.” A photo of an excessively rusty steel ball joint was presented, and the poster said Tesla service employees observed the “ball joint bolt was loose and caused the wear.” But the car was out of warranty, so the case was reportedly sent to management for consideration.
And, according to the poster, Tesla offered a “goodwill” deal on the condition that the evidence be buried, nothing be used in a suit, and Tesla admits no wrongdoing.
The Goodwill is being provided to you without any admission of liability or wrongdoing or acceptance of any facts by Tesla, and shall not be treated as or considered evidence of Tesla’s liability with respect to any claim or incidents. 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. In accepting the Goodwill, you hereby release and discharge Tesla and related persons or entities from any and all claims or damages arising out of or in any way connected with any claims or incidents leading or related to our provision of the Goodwill. You further agree that you will not commence, participate or voluntarily aid in any action at law or in equity or any legal proceeding against Tesla or related persons or entities based upon facts related to the claims or incidents leading to or related to this Goodwill. [Emphasis added]
As one might see, the terms were at least partially revealed, and the Daily Kanban says at least three more such NDAs are believed to have been offered to prevent reporting of defects.
An offer to fix a defective part in exchange for agreement to keep quiet is unheard of in the automotive industry, says the Daily Kanban, and could represent a chilling effect on federal processes.
The need for consumers to report such defects when found has been established by NHTSA which monitors and maintains a database.
A 2015 NHTSA Inspector General’s report citing “inadequate data and analysis” indicates auto safety regulators rely on owner reports as an info source not controlled by automakers.
Update, June 10; 7:30 a.m. EST: Yesterday numerous major media outlets followed this Daily Kanban story written by Edward Niedermeyer. Reuters wrote: “a spokesman for the U.S. National Highway Safety Administration (NHTSA), Bryan Thomas, said the agency is “examining the potential suspension issue on the Tesla Model S, and is seeking additional information from vehicle owners and the company.” Reuters also quoted NHTSA Administrator Mark Rosekind in an interview in Washington: “Part of what we have to figure out is whether or not (non disclosure agreements) might have impeded people making (complaints),” Rosekind said, adding that NHTSA has been seeking information from Tesla. “Our folks were on this right away.” And, wrote Reuters: “A review is a step before the agency decides whether to open a formal investigation leading to a potential safety recall.”
In response, Tesla issued a blog post saying 1) There is no suspension defect, 2) NHTSA has not opened an investigation, 3) Tesla never told customers to not speak to NHTSA.
It said also the car with 70,000 miles is a relative anomaly- “We haven’t seen this on any other car, suggesting a very unusual use case,” said Tesla. It also said its NDAs are to protect it against liability. It ended on a note personally calling out the Daily Kanban’s Edward Niedermeyer, asking whether his “motivation is simply to set a world record for axe-grinding or whether he or his associates have something financial to gain.” Tesla’s entire blog post can be read here.
After news reports yesterday NHTSA quotes from major media outlets, and used terms like “investigation” (which this term steps wide of in describiong HNTSA’s looking into Tesla, Tesla replied saying the case of the 70,000 mile Model S was an anomaly.
While much has yet to be revealed about the control arm case, the Kanban observes a Technical Service Bulletin (TSB) issued in March of 2015 indicates a “known non-safety-related condition” regarding the Model S front lower control arm. It cites “greater free play than expected” can develop in the assembly’s steel ball joints, which can damage the aluminum control arm.
The Kanban notes also TSBs have been used by other automakers to avoid greater liability and damage to reputations, citing former NHTSA Administrator Joan Claybrook commenting on the GM ignition switch recall.
“Technical-service bulletins have been recall-avoidance devices — there’s no question about that,” she said.
Unlike General Motors, however, Tesla has not seen any major accidents, or lost lives, or taken years refusing to do right. Clearly, therefore, even if a policy of covering up is similar in kind to what was perpetrated by an ethically challenged GM, Tesla has not caused even a tiny fraction of the damage.
Moreover, anecdotes and testimonials of Tesla’s outstanding customer service policies have also been widely proclaimed by satsified Tesla customers.
However, also unlike GM, which has had enormous fallout and loss of goodwill, Tesla may be less able to absorb a sudden loss of investor confidence.
Industry observers have frequently said a major recall could be damaging to the company still trying to establish profitability.
The Kanban observed as much, citing also a January 14, 2014 tweet by Musk.
“The word ‘recall’ needs to be recalled,” Musk is reported to have said.
This tweet was itself recalled – erased from Twitter – but it lives on in this Bloomberg story.
Whether the pieced-together evidence at this stage add up to as dire a case as is being alleged however does remain to be seen.
Neither Tesla nor NHTSA have commented, so nothing is therefore settled. The Daily Kanban says it will report more when it learns more.