Tesla Motors Inc. Model S lost the Consumer Reports recommendation on Tuesday after which the stock has continued to fall. Previously, the magazine gave the car its highest-ever rating of 103, therefore, Tuesday’s news left Wall Street shocked. But many analysts are not worried.
Impact to wither off soon
On Tuesday, the stock was down 7%. Many analysts believe the news will not have a major long-term impact on Tesla. CR said the Model S owners indicated many problems of varying nature, but experts believe not many used Tesla’s have come for sale. Some are saying that the worries will blow away by Q1, suggesting it would be beneficial to own the stock in the first three months of 2016.
Drive train are one among the many issues reported by Tesla Motors Inc. Model S users. The owner facing the issue needs to get the motor replaced. The other issues are failure of the charging system, difficulties faced when trying to keep the door handles from retracting and problems with the display inside the car.
In a report on Oct. 20, Stifel said they’re trying to gather maximum possible information on the CR story. However, analysts note that it is interesting that such a high number of problems are being reported and for such long duration as the number of used Tesla’s being sold is not high.
Barclays analyst also feels that the uncertainty will be over soon. Analysts expect the demand to get affected for a while as the reliability concerns may force potential buyers to negate the impressive features of Model S.
Tesla Model S reliability has improved
TrueDelta.com, a private auto reliability tracking service, said the reliability of Model S has improved by about 20% in the past year. But the website noted that the reliability of the Model S is less than the typical new car by three to four times. Before any research, Consumer Reports asks the owners to report any serious problems they face, and the website suspects this could be reason Consumer Reports witnessed such a spike in the complaints.
“I think what has shifted is owner expectations, not the number of flaws. The early adopters tend to be very forgiving of glitches. As you expand the consumer base you get people who have less tolerance for problems,” the website said.
Commenting on the CR rating, Tesla CEO Elon Musk took to Twitter on Wednesday, and said, “Consumer Reports reliability survey includes a lot of early production cars. Already addressed in new cars.”
On Wednesday, Tesla Motors Inc. shares closed down 1.38% at $210.09. Year to date, the stock is down over 5% while in the last five days the stock is down over 3%.