Tesla loses hundreds of orders due to the NYT article

Brian Sin - Feb 25, 2013, 5:49 pm CST
Tesla loses hundreds of orders due to the NYT article

Elon Musk, CEO of Tesla Motors Inc., stated that because of the controversy surrounding the New York Time’s article written for Tesla’s Model S, the company has lost hundreds of orders for the car. There were hundreds of cancellations pouring in, and it ended up cutting down Tesla’s stock market value by up to $100 million. Since the N.Y. Times article was published, Tesla saw shares fall 12%, from $39.24 to $34.38. Also because of the article, Tesla’s market capitalization fell around $553 million.

Musk was obviously upset with the New York Time’s article, and even offered his own rebuttal to the article, much to the objection of his peers. He stated that, “I’d rather tell the truth and suffer the consequences, even if they are negative.” His statement worked because shortly after he spoke out against the New York Times, the New York Times issued an apology. Musk doesn’t want the writer of the article, John Broder, to be fired for his review, nor does he want his career to end, but he did say that Broder “fudged” the article.

Musk also talks about the production rate for the Model S. Musk says demand is continuing to grow. As the Model S is delivered to various regions in the country, there is actually more demand for the Model S, and the sales it has now isn’t solely driven by early adopters. Tesla currently produces 400 cars per week, and hopes to produce 20,000 by the end of this year. It also helps that consumers are given a $7,500 subsidy from the U.S government when they purchase a Model S. Without the subsidy, Musk believes that demand may drop 10%-20%.

Despite the damage done by the New York Time’s article, Musk is optimistic about Tesla’s future. It seems that demand for the Model S is still growing and eventually all of the controversy will be put behind the company. Musk also hopes that Tesla will be able to forgo help from the U.S. government in the future, and be a stand-alone company.

[via Bloomberg]

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