NY Times Model S review brought Tesla a stock-market value drop of $100 million

Article by Christian A., on March 1, 2013

The New York Times article that claimed that Tesla’s Model S sedan fell short of its estimated range cut down the value of its stock market shares by up to $100 million, according to CEO Elon Musk. When interviewed by Betty Liu of Bloomberg, Musk said that the impact of the article that came out on The Times’ website is not trivial.

The article claimed that Model S didn’t meet the claimed 300-mile (483- kilometer) range “under ideal conditions” when it was test-driven in cold weather. On Twitter, Musk referred to the story as “fake.” In a blog on the website, The Times’ public editor noted that there were defects in the story.

Tesla is relying on the Model S to turn a profit this quarter, with the exclusion of several costs. Tesla, which is based in Palo Alto, California, aims to increase Model S output by at least 25% this year. It is also slated to introduce the Model X crossover in 2014. Since Feb. 8 (the day the Times article first came out), Tesla’s shares have dropped 12%, from $39.24 to $34.38.

In fact, it reported a 4.8% drop today at the close in New York. According to information that Bloomberg compiled, Tesla’s market capitalization fell by about $553 million. During this period, the Standard & Poor’s 500 Index fell by 2%. As of today’s closing, the company’s stock-market value is $3.91 billion. Musk also stated during the interview that without a $7,500 U.S. tax credit, the demand for the Model S will be 10% to 20% lower.

Tesla's Model S is the first fully electric sedan. It is an evolution and a big leap forward in automotive engineering. Combining performance, safety, and efficiency, the Model S has reset expectations for the 21st-century car with the highest safety ratings possible, the longest range for any electric car, as well as constant over-the-air software updates.

Model S battery is located on the floor, giving the Tesla Model S a very low center of gravity, which in turn immensely reduces the risk of rollover and at the same time enhances performance and handling. Without an engine, the car possesses a crumple zone that is much larger compared to that of other performance sedans, enabling it to absorb energy in the event of frontal impact.

Moreover, the Model S is one of the road's safest cars, thanks to its unique electric drivetrain sitting beneath it and its low center of gravity. The car's NHTSA (National Highway Traffic Safety Administration) and Euro NCAP (European New Car Assessment Programme) 5-star safety rating prove its safety record. It is also setting a record for having the least likelihood of injury to passengers when tested in the U.S.

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