As I mentioned in my article on Tesla vs. Fisker, Elon Musk takes great use of Twitter as a marketing machine. Some of his comments have had an immediate (positive) impact on the Tesla stock price, or on the Tesla brand perception. He (or is it his team?) also contributes to the blog on the teslamotors.com website.
With the recent media coverage of 3 Tesla Model S catching fire within 6 weeks time, all of them after impact that punctured the battery compartment, Tesla stock has taken a big hit, and yet again Musk was quick to respond. However, he is taking a very liberal approach to statistics and risking a kickback from a bold claim.
Tesla’s reaction to the fires
He has written a lengthy article in the Tesla blog, revealing 3 actions Tesla is taking:
- An update to the air suspension, which is done wireless to the vehicle’s computer, to increase the ride height at highway speeds, reducing the chances of underbody impact damage.
- Musk announced that any damage as a result of a Tesla Model S fire, even due to driver error, will be covered by the warranty. He is smart enough to make the reservation that a deliberate attempt to destroy the vehicle is not covered. He is talking to Americans after all, the same people who need a warning sticker to tell them their airbag may hurt them while saving their lives.
- Tesla claims to have requested an investigation by the NHTSA, National Highway Safety Administration, not only to make sure there’s no safety defect to the cars and to prove Musk’s statement that the Model S is safe, but also to shut down any negative publicity of people parroting about the fires, without knowing what really happened. However, NHTSA denies this claim and says that they initiated the investigation after the third fire.
If Musk’s claim about who initiated the safety investigation proves to be “a bit overstated”, it may hurt his credibility in the future. For someone who is known for his bold claims, credibility is key, or he will make a fool of himself.
Musk also quotes an Automotive News article in which is calculated that with more than 19.000 Model S vehicles on the road and 3 fires, an average of one fire per 6.333 vehicles has occurred. This compares favorably to 187.500 car fires in just over 250 million registered gasoline vehicles, one fire per 1.350 gasoline vehicles.
How to let statistics do the lying for you
In which way are these statistics bent in order to favor Musk’s claims?
- For one, you can’t compare brand new Tesla Model S with all vehicles on the road, including 1980s barrels that haven’t been maintained for a decade.
- Also, Musk lays a lot of emphasis on the fact that there have been no deaths as a result of a Tesla fire. Based on 250 million car on US roads leading to 209 deaths annually, we can conclude that there’s one death for every 1.185.000 cars on the road. Since Tesla has only 19.000 cars on the road, it’s an easy claim to make. However, if one death occurs before Tesla has almost 1,2 million cars on US roads, it’s death rate will be higher than average.
- And third, let’s do an honest comparison, from one full electric car to the other: with over 30.000 Nissan LEAF on US roads, no fires have been reported yet.
Tall trees catch the wind
Musk must know that he calls it upon himself when he calls his Model S “The safest car in the USA”. Even if it still is, he’s bound to get burnt by those who mistake confidence for arrogance. The same thing goes for his claim that “Based on the Model S track record so far, you have a zero percent chance of being hurt in an accident resulting in a battery fire, but what about other types of accidents? Despite multiple high-speed accidents, there have been no deaths or serious injuries in a Model S of any kind ever.” You can bet the first death or serious injury will hit worldwide headlines and bite Musk in his rear end. But then again, he probably will have a witty reply by that time as well. Something like: “no bugs have ever been killed by a Tesla Model S windscreen.”
His tweets and communication are open and appear to be honest. Of course he should defend himself when attacked. After all, he is David fighting Goliath. But Musk should watch his credibility when making bold claims that can easily be checked for the truth and when using skewed statistics to prove his right. Let’s give him the benefit of the doubt for now, and let’s await the NHTSA investigation.
If they find anything that leads to an improvement in Model S safety, Musk has promised to retrofit the solution to all Model S on the road. That would be a sign to dump your Tesla stock, as this could potentially cost him hundreds of millions. Maybe not all his tweets kick up the stock value.