Will Tesla's 'Brick' Issues Weigh on Its Stock Price?

A recent blog post from has highlighted a possible major setback to purchasing a Tesla Motors (Nasdaq: TSLA  ) 100% electric luxury car. In the post blogger Michael Degusta explains that at least five known cases have been reported to Tesla about full battery failure, causing the Roadster to turn into what has been described as a 2,700-pound "brick."

The mother of all dead batteries
Many of us have experienced a dead car battery: the hassle, the cost of getting a new one installed, and the all-around frustration associated with the process. But after a few hours and roughly $100, the disaster is over and we go on with our lives. When the $100,000 Tesla Roadster's battery dies, not only will the car become immobile after the wheels lock, but getting a new battery installed will cost the owner a cool $40,000.  

Tesla's response to the problem states that the car should be plugged in whenever possible and all batteries are subject to damage if left at a zero charge for an extended period of time. The representative went on to imply that all vehicles need regular attention to avoid catastrophic failure by saying that even combustion engines need regular oil changes or the engine will be destroyed.  

Just a speed bump?
Degusta's article goes deeper, claiming that Tesla knew about the battery issue and left customers in the dark. While most would agree that the company should have been more forthcoming with owners, Tesla's new technology having battery problems is not a first in the automobile industry. Nissan (OTC: NSANY.PK) has been upfront about the issues with the Leaf's battery pack losing capacity with time.  The company has explained that after five years or 60,000 miles of use, the battery will retain only about 80% of its original capacity. GM's (NYSE: GM  ) Chevy Volt had a more serious problem with reports of fires starting from the battery pack, days or even weeks after a car accident.  While the sales for both cars have been mixed over the past months, the vehicles are still selling. Chevy sold more than double the number of Volt's in January 2012 than in 2011. Nissan has sold over 10,000 Leafs in total, but moved one-third fewer this January than they did the previous year.

Other industries that rely heavily on battery technology have also been plagued with problems. Apple has (Nasdaq: AAPL  ) experienced battery problems with nearly every generation of the iPhone, the iPod, and now reports of battery issues with the iPad have arisen. Google's (Nasdaq: GOOG  ) Android-powered devices also have had customers complaining about battery life. The big complaints come from those who are regularly on the internet and downloading applications. Even laptops have had issues recently: Dell, Hewlett-Packard, and Apple have all recalled thousands of batteries for overheating and electrical shorts.

Foolish takeaway
While fires in laptops and the Chevy Volt are very serious problems, a dying battery due to surfing the Web or driving is really just the nature of the device. They need to be plugged when you are not using them if you want them to work.

There are always growing pains associated with new technology and the pain falls on the early adopters. So even though I do feel Tesla should have been more open in the beginning about the battery problems, I don't believe this will have a lasting effect on vehicle sales. All in all, I'm still bullish on Tesla, which is why I am reiterating my thumbs-up Caps Call for this rule-breaking car company.

Fool Contributor Matt Thalman owns shares of Tesla Motors but no other companies mentioned above. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Tesla Motors, Apple, General Motors, and Google and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (6)

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  • Report this Comment On February 27, 2012, at 9:18 PM, brunsmrk wrote:

    It's minor ... but extremely important if the lesson is not internalized.

    Think about the following story as a metaphor: You driving through a residential area to pick up a colleague for an very important business meeting. You have enough time, but you are super anxious to to get to the meeting early and be prepared, so you are driving plenty fast and your main focus is on the big meeting. You almost hit a little girl, you scare her and she's crying -- you're upset by the whole thing, so you react by going off on her mother for being irresponsible and letting her daughter walk into traffic; as a result, the mother is crying along with her little girl -- as a self-righteous arrogant dick you speed off to your meeting and congratulate yourself for scolding the mother. You have plenty of time, so the time spent yelling at the mother doesn't really penalize you -- you get to your meeting and everything goes fine. The problem is that if you continue being an arrogant dick, you will eventually do something similar to killing the little girl ... your lawyers will keep you from being convicted of a crime [because the little girl's mother *is* responsible for keeping her daughter off the street], but you will still be an arrogant dick.

    Tesla has the chance to reform its behavior, become more enlightened and step up to a higher level ... to not be an arrogant dick ... everybody stumbles a bit, this whole thing is TEENY; Tesla has committed no crime ...but whether or not Tesla has the capacity to learns from from a tiny lesson determines whether Tesla has the stuff to become a great company. There is a difference between a rule-breaker [who should be in prison or, at least, avoided] and the revolutionary organization that uses every opportunity to get smarter.

    The jury is still deliberating ... the world of automotive OEMs is a guilty until proven innocent world ... it's up to Tesla to make its case.

  • Report this Comment On February 28, 2012, at 5:29 AM, TomMcl wrote:

    I'm disappointed to see Motley Fool propagating the malicious falsehoods in Degusta's rather obvious smear without considering the emerging facts in this whole saga.

    It is now known that the actual owner of the car in question ran the battery down to 20% of its capacity last November, then parked it up unplugged for a couple of months and neglected to heed all the warnings shown to the driver when he last drove it, and over the course of 2 further months he ignored all of the cars warnings including a final 7 days worth of audible and visual messages as the car pleaded for help … and sure enough it eventually shuts down completely. Despite being the wealthy CEO of a tech company he claims he didn’t notice any of the significant battery care statements on the purchase invoice, or on the Acknowledgment of Care form which he had to sign, or in 6 pages of the manual in bold letters, and didn’t realise that devices like laptops, mobile phones and digital cameras also all have similar tech batteries which need to be charged from time to time. Then, after failing to sell it on ebay, the owner then threatens to smear Tesla Inc with PR damage unless they fixed his problem for idiotically ignoring all possibly warnings. And then he throws all his toys out, and gets a 'friend' to do the PR damage, rather than facing up to his own failings….

    Now, it is worth noting that you can cause a similarly expensive amount of damage on similarly expensive gas powered car by leaving them to rot for a few months as well.

    If you ignore oil slowing dripping out your Ferrari engine until it ceases up, and need a new one, it will cost considerably more than $40k to fix. Same goes for modern fuels which do go off over many months and will lacquer up in the fuel lines.

    Basically, expensive cars need the owner to care for them not neglect them for months.

  • Report this Comment On February 28, 2012, at 8:18 AM, davidslagle wrote:

    I have several gasoline operated cars that are now bricks.The cost to refuel these vehicles is uncontrollable and has become unaffordable. I can't even sell them because their gas hogs. The cost for gas is the reason a person needs to search for a alternate source for propelling their transportation .Charging a Tesla off solar panels purchased with a federal solar panel rebate is another good reason to go electric. While your not charging the Tesla use the energy from your solar panels to power your home. Tesla never said it was cheaper to operate over the long haul but it does allow for your control of refueling expenses. You can also gain an asset in solar panels rather than watch the smoke from your oil burner fly away. Driving 100000 miles in a gas car @ $4.00/gal @15mpg = $26666, little technology to make promising advancements, and the drive train has 100000 miles on it! Can't even estimate the maintenance cost. That's all at today's prices. You'll soon get the picture or the middle east will own you. Stop this oil madness!

  • Report this Comment On February 28, 2012, at 11:53 AM, BenS1234567 wrote:

    Why all the hate against Tesla? This is clearly a non-issue. One blogger with a few "anonymous" sources claims there's a brick issue, but it takes months to drain your battery without charging for this to happen. I just don't get it. I guess bloggersphere is need of some material.

  • Report this Comment On February 28, 2012, at 4:03 PM, Hawmps wrote:

    Under the article "Why I Bought a Chevy Volt, and a Tesla May Be Next" published February 21, 2012......

    On February 24, 2012, at 9:25 PM, Hawmps wrote:

    http://www.greencarreports.com/news/1073312_is-tesla-brickin...

    Do you guys read other TMF articles before you publish?

  • Report this Comment On March 07, 2012, at 4:56 PM, clickwhirrpop wrote:

    This is not a battery problem, and it's not a Tesla problem. It's a problem with battery powered vehicles. The expectation that a parked car requires little to no maintenance is one born out of our history with the internal combustion engine. The truth is that all battery powered vehicles and many battery powered consumer products never fully power off. Some electronic circuits must remain active to, for example, monitor the safety status of the battery pack, look for a connection to a charging station, listen for the keyless entry device, or power the alarm system. Even if these functions were all powered via a conventional lead-acid car battery when the car is "off", there is still a slow self-discharge of the high voltage battery pack that can't be avoided. People will eventually get used to the fact that electric cars must be recharged often. It'll become another bit of common knowledge similar to the common knowledge that one should spend a little money replacing their timing belt when recommended rather than risk having to spend a lot of money if it fails.

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