Feds scrutinize Tesla over safety

(Bloomberg) --The U.S. National Highway Traffic Safety Administration sent Tesla Inc.’s Elon Musk a cease-and-desist letter last year regarding Model 3 safety claims and has subpoenaed the carmaker for information on several crashes, according to documents posted by a nonprofit advocacy group.

NHTSA lawyers took issue with an Oct. 7 Tesla blog post that said the Model 3 had achieved the lowest probability of injury of any vehicle the agency ever tested, the documents released Tuesday by the legal transparency group Plainsite show. The regulator said the claims were inconsistent with its advertising guidelines regarding crash ratings and that it would ask the Federal Trade Commission to investigate whether the statements were unfair or deceptive acts.

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Attendees try out a Tesla Inc. Model X electric vehicle during the press day of the Seoul Motor Show in Goyang, South Korea, on Thursday, March 28, 2019. The biannual auto show will be held at the Korea International Exhibition Center (Kintex) until April 7. Photographer: SeongJoon Cho/Bloomberg

The documents, obtained through a Freedom of Information Act request, also include orders for information that NHTSA sent to Tesla following several crashes, including a fatal March 1 crashinvolving a Model 3 operating on Autopilot. Tesla shares fell as much as 2.1% to $225.80 shortly after the open of regular trading Wednesday.

“If it’s a subpoena, it’s known to get quicker attention from the manufacturer generally, and it’s not a routine matter,” said Allan Kam, an independent auto-safety consultant who retired as a senior enforcement attorney at NHTSA in 2000. “It’s dealt with in a more prompt way and in a more serious way.”

Representatives for Tesla and NHTSA didn’t immediately respond to requests for comment. A spokeswoman for the FTC declined to comment.

NHTSA issued a statement in October that took exception with Tesla’s characterization of the agency’s safety ratings. The agency said its crash tests combine into an overall safety rating and that it doesn’t rank vehicles that score the same ratings. NHTSA’s guidelines for the use of its test results in advertising warn that using terms such as “safest” and “perfect” to describe a particular rating or an overall score are misleading.

Repeat IssueNHTSA issued a similar statement in 2013, when Tesla said that its Model S achieved a vehicle safety score equated to 5.4 stars. The agency said then that it doesn’t rate vehicles beyond 5 stars.

“This is not the first time that Tesla has disregarded the guidelines in a manner that may lead to consumer confusion and give Tesla an unfair market advantage,” Jonathan Morrison, chief counsel at NHTSA, wrote in an Oct. 17 letter addressed to Musk.

Al Prescott, Tesla’s deputy general counsel, wrote in a reply letter that the company respectfully disagreed with NHTSA.

“Tesla has provided consumers with fair and objective information to compare the relative safety of vehicles having 5-star overall ratings,” Prescott wrote in an Oct. 31 letter.

An email exchange between Prescott and NHTSA’s Jeffrey Quandt, who works in the agency’s Office of Defects Investigation, also suggests the regulator has met quarterly with representatives for the electric-car maker.

A draft agenda for a March 27 meeting included an update on Autopilot performance and a review of a crash that took place that month in Delray Beach, Florida. In that incident, Autopilot was engaged when a Model 3 collided with a semi truck. The family of the deceased driver sued Tesla last week.