Tesla in Open Feud With U.S. Safety Board Over Crash Probe

(Bloomberg) -- Tesla Inc.'s tense relationship with the U.S. National Transportation Safety Board boiled over Thursday with both sides accusing the other of making improper disclosures regarding a fatal accident under investigation.

“It's been clear in our conversations with the NTSB that they're more concerned with press headlines than actually promoting safety,” the automaker said in a statement.

The NTSB took the unusual step of stripping the carmaker of its role in an investigation of a fatal crash involving one of its vehicles, saying the electric-car maker failed to abide by an agreement not to disclose information while the probe was underway. Tesla responded by saying it would make “an official complaint to Congress” about the agency.

“We will also be issuing a Freedom Of Information Act request to understand the reasoning behind their focus on the safest cars in America while they ignore the cars that are the least safe,” the company said. “Perhaps there is a sound rationale for this, but we cannot imagine what that could possibly be.”

Tesla shares closed down 2.3 percent at $294.08 in New York after falling by as much as 2.4 percent following Bloomberg's report of NTSB's action.

Earlier: NTSB Kicks Tesla Off Crash Probe for Violating Disclosure Pledge

David Whiston, a Chicago-based analyst with Morningstar Inc., doesn't yet see it as an investor issue. But, he added, “If you're going to fight with Washington, keep it behind closed doors as much as you can.”

Even as Tesla frames its position as being more transparent than the NTSB's, it risks looking like it's more concerned with deflecting blame than protecting customers, said Whiston, who acknowledged that it's a “tricky balancing act.”

“You need to cooperate with authorities, but you need to communicate with the public that you're concerned with safety,” he said.

The back and forth followed a week of unusually testy communication between the company and safety board, capped by a phone call Wednesday between NTSB Chairman Robert Sumwalt and Tesla Chief Executive Officer Elon Musk that was described as tense by a person familiar with the conversation.

“While we understand the demand for information that parties face during an NTSB investigation, uncoordinated releases of incomplete information do not further transportation safety or serve the public interest,” Sumwalt said in a statement issued Thursday.

The sparring followed public statements by the company blaming the driver of a Tesla Model X who died in a March collision, in apparent violation of agency protocols. The NTSB guards the integrity of its investigations closely, demanding that participants adhere to rules about what information they can release and their expected cooperation. These so-called parties to investigations must sign legal agreements laying out their responsibilities.

“It is unfortunate that Tesla, by its actions, did not abide by the party agreement,” Sumwalt said.

Tesla responded by accusing the NTSB of the same thing.

“Among other things, they repeatedly released partial bits of incomplete information to the media in violation of their own rules, at the same time that they were trying to prevent us from telling all the facts,” the company said in its statement.

The company also noted, correctly, that the safety board investigates accidents but regulation of the industry falls under the purview of the National Highway Transportation Safety Administration. That agency is also conducting an investigation of the March 23 accident.

“Talk about being brassy,” said Mike Ramsey, an analyst for researcher Gartner Inc. “The confidence is amazing. You cannot fake that confidence.”

But pointing out that NHTSA is the federal agency that has the real power in regulating automakers could backfire on Musk, Ramsey said.

“It's sort of like waving a red flag in front of the bull,” Ramsey said. “That puts NHTSA on the spot. He may have courted more trouble.”

--With assistance from Alan Levin

To contact the reporters on this story: Ryan Beene in Washington at rbeene@bloomberg.net, Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net, Jamie Butters in Southfield, Michigan, at jbutters@bloomberg.net.

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Craig Trudell at ctrudell1@bloomberg.net.

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