Tesla faces a recall, argues about semantics of the term

Elon Musk, the co-founder of electric carmaker Tesla Motors Inc., is arguing over semantics with the industry’s regulator, as he moves towards what he calls “a crusade to revolutionize the automobile”.

It all began as the U.S. National Highway Traffic Safety Administration last year started investigating battery fires in the $70,000-and-up Tesla Model S sedan as three road accidents drew attention. It escalated after the agency listed as a recall Tesla’s steps to reduce fire risks during recharging.

On January 14 Musk said on Twitter that “the word ‘recall’ needs to be recalled.”

“This is just the kind of reaction you get from someone who is essentially a rookie in the car business,” said for Bloomberg, Jack Nerad, executive editorial director with Kelley Blue Book. “You will not hear a seasoned auto executive knock NHTSA.”

Usually carmakers work behind the scenes to negotiate with NHTSA on the scope and timing of recalls. For the largest automakers, these efforts can result in recalls covering fewer model years or applying only to vehicles made in certain factories, narrowing the cost to companies.

Instead, Musk argued that Tesla is the most safe car and attention drawn on the recall is unnecessary.

“We’ve now almost 30,000 Tesla vehicles on the road. Fire incidents are one in 10,000. For gasoline cars, it’s one in 1,300. That doesn’t make any sense to us,” he said. “We should be applauded for how amazing our car is for never catching on fire relative to a gasoline car.”

Tesla issued an over-the-air software update that enables a charging Model S to reduce amperage if heating is detected. While Musk said that fix removed almost all of the safety risk, the company said January 10 it would mail replacement adapters to owners.

The plug adapter replacement showed up as a recall notice on NHTSA’s website January 13. Company officials said it wasn’t a true recall because customers could swap the parts themselves without taking their cars to a service center.

The agency began investigating the Model S on November 19 after two U.S. fires that started after drivers ran over road debris that punctured the cars’ lithium-ion battery packs. Investigators sent a set of detailed questions that the company answered within a week, Musk said January 10.

“We’re really quite keen to have NHTSA close the investigation or ask us for more information so we can provide it,” Musk said. “We would really, really like to get this done.”

Musk said the company shouldn’t need to report a safety issue that isn’t under NHTSA’s responsibility. It would be a bit silly to report to the car-safety regulator that somebody’s house had inadequate or faulty wiring, he added.

Tesla sent regulators an official recall notice, even as Musk opposed the use of the word. This indicates the company’s lawyers recognized the plug adapter as a safety defect under the law and that the company could be fined $35 million.

Teslas shares gained 13% this year, however analysts from CNN Money advise to hold shares of Tesla Motors and the median estimate is projected to be the same as the current price.