By David Z. Morris
October 22, 2017

If you’re Tesla, being called “average” isn’t just disappointing – it’s worth starting a fight over.

That became clear last Thursday, after Consumer Reports published a new report rating the reliability of several new cars, including the prediction that Tesla’s new Model 3 sedan would have average reliability.

CR hadn’t driven or examined a Model 3, but based its rating in part on improvements to Tesla’s Model S, from which the Model 3 borrows technology. More broadly, Consumer Reports wrote that it “makes predictions on every new and redesigned vehicle based on the manufacturer’s history and data from vehicles that share major components.”

But Tesla wasn’t having it, responding before the end of the day with broad condemnation of Consumer Reports’ methods. Tesla declared the reliability rating lacked “basic scientific integrity,” in part because the reviewers “have not yet driven a Model 3.”

“Time and again,” Tesla’s statement continued, “our own data shows that Consumer Reports’ automotive reporting is consistently inaccurate and misleading to consumers.”

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On Friday, Consumer Reports shot back, saying, “Tesla seems to misunderstand or is conflating some of what we fundamentally do.” The publication reiterated that its reliability prediction is based on a manufacturer’s track record, and is different from a review or a road test. Moreover, Consumer Reports said that an “average” reliability rating is “generally a positive projection for any first model year of a car.” Consumer Reports’ initial press release that touted the rating even characterized it as “promising.”

That makes Tesla’s response seem doubly strange. The carmaker complained about a rating some other manufacturers might have been perfectly content with – and did it while impugning the basic integrity of a publication they’ve been happy to cite when it gives them good reviews.

That has included the perfect 100 awarded to the Tesla Model S P85D in Consumer Reports road tests back in August 2015. Accolades from Consumer Reports, which Tesla now says are “consistently inaccurate,” are still featured no fewer than six times on Tesla’s press page. As CNBC pointed out, even CEO Elon Musk has directly cited Consumer Reports results on Twitter – when they’re positive.

But this isn’t the first time Tesla has sparred with Consumer Reports, though the carmaker comes off as particularly thin-skinned this time around. And it turns out there’s a reason for the overreaction.

Tesla is in a uniquely tenuous position right now, thanks to what appear to be serious production challenges with the Model 3. On Friday, JPMorgan cut the fourth-quarter forecast for Model 3 deliveries in half. Those issues — particularly reports that some of the cars have been assembled by hand while automated systems are brought online — provide legitimate fuel for concerns over reliability. Consumer Reports didn’t even cite those reports in its reliability assessment, which could be seen as cutting Tesla some slack.

Tesla had similar problems with production of the Model X luxury SUV, but the Model 3 is a whole new ballgame. It’s Tesla’s bid to move from the luxury niche into the mass market, as outlined in Musk’s long-standing Master Plan. If they can’t pull it off — for instance, if the Model 3 doesn’t live up to the sterling reputation of its luxury siblings — it could undermine that ambitious roadmap, and the company’s massive valuation.

Of course, Musk and Tesla have shown that they can overcome early headwinds and accomplish stunning, nearly magical things. Betting against them at this stage ignores a deep well of determination and talent. But in this exchange, the company might have conveyed more confidence simply by keeping quiet.

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