John Broder, a New York Times reporter, published a damning review of Tesla's (NASDAQ:TSLA) Model S after his test drive of the vehicle along the east coast in bitter cold weather. Elon Musk, Tesla's CEO, fired back with a data log accusing that Broder published a "fake" report. Broder immediately countered with his point-by-point rebuttal of Musk's accusations. This public finger-pointing attracted many bystanders in the Twitter space and press coverage in general. Many questioned Musk's wisdom of taking on the NYT in such a high profile debate. I happen to believe Musk made a brilliant move.
Why? While enjoying a plethora of praises and awards, Tesla's model S, as an electric vehicle, still faces many skeptics and entrenched hostilities against "green technologies." Musk must vigorously defend against false accusations to protect the image of his product. His "show" is not for the enthusiasts and naysayers of the extremes. The bulk of the consumers in the middle are taking a wait-and-see position over electric vehicles. Musk is telling the public that he stands behind his product and will not allow the image of his product to be tarnished by a biased reporter. His strong reaction inevitably provoked criticisms of his credibility given his position and interests in the company. However, an apologetic or even procrastinated response will give credence to the negative review. Once the negative images take root in public's mind, it will be costly and time consuming to reverse the damages. This is the reason that Musk must react decisively and forcefully if he believes the review is factually dishonest.
This is not the first time Musk has made a controversial response to a suspicious depiction of his product. He took Top Gear, a British TV series, to court in 2009 for alleged misrepresentation of the driving range of Tesla's Roaster. Everybody knows Top Gear is an entertainment show. Some pointed out that Top Gear's host Jeremy Clarkson is paid to piss you off. The case was eventually thrown out by the court. Tesla's lawyers are not dumb. Musk is not dumb. Why did Musk bother to take Top Gear to court? The wisdom of Musk is in making a statement to the public that Tesla is so confident in its product that it can prove Top Gear's falsehood in court. It would have been better for Tesla to win the case. Nevertheless, Musk made his case in the court of public opinion and arguably prevented a lingering negative image.
On the same day as posting Musk's scathing response to Broder's article, Tesla gave two CNN reporters a Model S to retrace Broder's route. This is another brilliant move by Tesla. Timing is the essence in damage control. Tracing Broder's route will take only two days. Assuming Musk is right; the CNN reporters' review is likely to be positive. A positive testimony plus Musk's outlay of data will close the case effectively in favor of Tesla. In my opinion, any temporary slide of Tesla's share price due to Broder's article presents a buying opportunity.
Disclosure: I am long TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.