Tesla Tumbles After Consumer Reports Drops Model 3 Recommendation

The awful start to 2019 continues for Tesla.

Just hours after the company's brand new general counsel quit and CEO Elon Musk may have violated his consent order with the SEC by Tweeting false 2019 guidance, Consumer Reports has now pulled its recommendation of the Model 3 based on reliability issues. "Members say they’ve identified a number of problems with their cars, including issues with its body hardware, as well as paint and trim," Consumer Reports said

The report called reliability "a weak spot" for Tesla and noted that no other Tesla models carry CR's recommendation, either. Tesla shares quickly dropped to session lows in response to the report:

Jake Fisher, senior director of auto testing at Consumer Reports said: "While Teslas perform well in Consumer Reports’ road tests and have excellent owner satisfaction, their reliability has not been consistent, according to our members, which has resulted in changes to their recommended status."

The survey found that the Model 3's sole touchscreen would often malfunction. “The touch screen would intermittently begin acting as if someone was touching it rapidly at many different points. This fault would cause music to play, volume to increase to maximum, and would rescale and pan the map in the navigation system,” one CR survey respondent said. 

Other owners complained about paint trim defects and windows cracking. "Earlier this year, our test vehicle developed a large crack in its massive rear window during a cold spell when it was parked outside," Consumer Reports said. 

And it's not just the Model 3 that was brought up in the report. "Tesla’s other models have suffered from below-average reliability as well," the report says.

It continues: "The Model S sedan has had an inconsistent history, being above average, average, and below average, with each downward move following in the wake of a hardware change made by Tesla."

Naturally, Twitter lit up after the report was released. 

The timing for Consumer Reports to pull its recommendation couldn’t be worse, with short-sellers recently doubling down on the idea that Tesla is facing a significantly ugly growth trajectory and demand for the Model 3 seemingly falling off a cliff and catalyzing price cuts, as we have reported recently.