May 22, 2018 / 10:41 AM / a month ago

Consumer Reports to retest Tesla Model 3 after brake fix

(Reuters) - Consumer Reports said Tuesday it will retest brakes on Tesla Inc’s (TSLA.O) new Model 3 sedans after Chief Executive Elon Musk promised a software update, but the potential hit to sales from the magazine’s negative review weighed on Tesla shares.

A review by the influential magazine on Monday said the car, despite many positives, had “big flaws,” including braking slower than a full-sized pickup truck. That criticism adds to headaches for Musk, already facing pressure over a series of crashes, production issues, and the company’s finances.

“If Tesla can update the brakes over the air - an industry first - we’d be happy to retest our Model 3,” said Jake Fisher, Consumer Reports’ director of automotive testing.

In mass-market, mid-sized cars, vehicles recommended by Consumer Reports account for over 80 percent of the category’s sales volume, Barclays analyst Brian Johnson wrote in a client note.

Musk in a tweet late on Monday acknowledged the brake issue and said that the magazine’s tests had used two early versions of the car before improvements had been made.

“Looks like this can be fixed with a firmware update,” Musk tweeted, saying Tesla aimed to roll out a solution a few days. “With further refinement, we can improve braking distance beyond initial specs.”

Musk said he would ask Consumer Reports to retest using a more recently built car.

The Silicon Valley company uses so-called “over-the-air updates” (OTAs) to send software fixes and improvements to its cars.

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Tesla stock, down more than $100 a share since September, fell 3.3 percent to $275.01 (£204.7) on Tuesday. The shares had finished almost 3 percent higher on Monday, helped by news of plans to deliver higher-priced, more profitable versions of the Model 3.

The Model 3 began production in July, but the rollout has been hampered by production bottlenecks. The company now plans to build 5,000 vehicles per week by the end of June.

Musk said the variability in stopping distance was due to a braking system calibration algorithm and could indicate some Model 3s took longer to stop than others.

“If so, we will address this at our expense. May just be a question of firmware tuning, in which case can be solved by an OTA software update.”

Tesla has had a fraught relationship with Consumer Reports in the past. A year ago, the magazine pulled its top ranking for Tesla’s flagship Model S sedan due to the automaker’s failure to install an emergency braking feature, but later reinstated it after Tesla performed an OTA to add that feature.

The magazine also did not recommend Tesla’s Model X SUV, calling it “more showy than practical.”

Neil Saunders, managing director of consumer research house GlobalData Retail, said the braking reports would not deter Tesla fans, “it might raise doubts among the more casual buyer.”

Reporting by Sonam Rai and Vibhuti Sharma in Bengaluru; writing by Alexandria Sage; editing by Patrick Graham and Nick Zieminski

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