Problems Mounting for Tesla – Elon Attacks Media and Quality Control Slips

This is not investment advice. The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.

The main news today concerning Tesla (NASDAQ:TSLA) is some remarks its CEO, Elon Musk, tweeted out at Reuters, Business Insider, and CNBC journalists. The colorful CEO claimed that Reuters and BI both conspired to publish stories that inaccurately portrayed the automaker in a negative light. He then also fired off at CNBC for featuring "poor analysts".

His first comments, aimed at Reuters, call out discrepancies in the publication's production numbers it cited in a recent article:

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Musk then turned his sights to Business Insider staffer Linette Lopez. He claimed Linette published lies about Tesla and even accused her of paying an old Tesla employee for inside information which may not be surprising given it's called Business Insider.

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Perhaps juicier even he calls her out for potentially aiding on insider trading to a short-seller.

Tesla has seen an almost 3 week long string of stock price losses amid swirling rumors of quality control concerns

Much more important to Tesla is that investors just don't seem interested in supporting a share price north of $350. News has been slipping out throughout this week about some manufacturing related issues.

It might not be a coincidence that its Business Insider and Reuters leading the charge with some of these stories.

Business Insider reported on the 3rd of July that Elon Musk ordered a standard brake check QC test to be sidestepped in an effort to speed up output of Model 3's.

The fairly standard "brake-and-roll test" is a crucial quality control step. The test ensures that the car's wheels are perfectly aligned and checks the brakes and their function by taking the vehicle's engine up to certain RPM's and watching how they react on the diagnostic machines.

Tesla representative Dave Arnold commented that every car goes through "rigorous quality checks," including the aforementioned break and roll test.

"To be extremely clear, we drive *every* Model 3 on our test track to verify braking, torque, squeal, and rattle," Arnold said in a statement. "There are no exceptions."

Perhaps automakers like Tesla are looking to the "EA" video game model where the public beta tests products?

What's likely is that Tesla may be re-ordering or temporarily stalling some QCs and the media is having a field day with it. While it is possible Elon is truly going mad and foregoing an essential control check, the CEO has at least shown a penchant and real drive towards standards and consistent quality so this move seems unlikely.

All this comes at a time where Model 3 production numbers are absolutely critical, both for investors and the company alike. We reported earlier this week that Tesla hit a milestone of 5,000 units per week just as Elon promised to do.

It may be that the brake test getting skipped in the QC protocol had something to do with the milestone achievement we discussed in the link above...