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[Markets] New FOIA Shows Tesla Was Subpoenaed, Sent A Cease & Desist Letter By NHTSA

It looks like the honeymoon between Tesla and the NHTSA could be over, effective October 2018. 

The U.S. National Highway Traffic Safety Administration (NHTSA) sent a cease and desist letter to Tesla last year, Bloomberg reported today on the 1-year anniversary of the "funding secured" tweet, for "not complying with the agency’s guidelines in its Model 3 safety assertions". The NHTSA also reportedly subpoenaed Tesla for information on several crashes. The documents were revealed through a FOIA request by non-profit advocacy group PlainSite. 

NHTSA lawyers reportedly weren't happy with a blog post that Tesla made in October, claiming that the Model 3 had "achieved the lowest probability of injury of any vehicle the agency ever tested." The NHTSA said that the claims were inconsistent with its advertising guidelines regarding crash ratings and that it would ask the FTC to investigate if the claims were unfair or deceptive. 

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

The NHTSA released a statement back in October noting that it took exception with the company's characterization of its safety ratings. The NHTSA said that its crash tests combine into an overall safety rating and that it doesn't rank vehicles that score the same ratings. The agency warned that using the words "safest" and "perfect" to describe a rating is misleading. 

This isn't the first time this has happened, either. The NHTSA released a similar statement in 2013 when Tesla said its Model S achieved a score of 5.4 stars, correcting that it doesn't score beyond 5 stars. 

Jonathan Morrison, chief counsel at NHTSA, wrote in an Oct. 17 letter to Musk: “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.”

Tesla's deputy general counsel responded about two weeks later: "Tesla has provided consumers with fair and objective information to compare the relative safety of vehicles having 5-star overall ratings." 

In addition, it appears as though more than 450 documents were withheld from PlainSite's FOIA request, which they are currently appealing. 

Published:8/7/2019 1:33:39 PM
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