Tesla founder and CEO Elon Musk is aggressively pushing back against a Fortune claim that the company did not disclose a material fact to shareholders when it sat on the news of driver Joshua Brown's fatal crash in a Model S while in autopilot mode in early May. For public companies, withholding a material fact is a serious matter that often results in litigation by angry shareholders.
The company "immediately" reported the May 7 accident to the National Highway Traffic Safety Administration, but did not disclose the crash publicly until the NHTSA did, on June 30. But eleven days after the tragic death, on May 18, Tesla and Musk sold more than $2 billion of Tesla stock in a public offering, reports Fortune, which noted:
To put things baldly, Tesla and Musk did not disclose the very material fact that a man had died while using an auto-pilot technology that Tesla had marketed vigorously as safe and important to its customers.
At Tesla's annual shareholder meeting on May 31, Musk described the future of the company's technology, but also did not mention the crash that had occurred three weeks earlier. Per Fortune, during the final editing of its story, Musk angrily emailed the writer that the crash "is not material to the value of Tesla," adding:
Indeed, if anyone bothered to do the math (obviously, you did not) they would realize that of the over 1M auto deaths per year worldwide, approximately half a million people would have been saved if the Tesla autopilot was universally available. Please, take 5 mins and do the bloody math before you write an article that misleads the public.
After the story was published, Fortune editor Alan Murray tweeted that the death "seems pretty material" to me. And Musk fired back in his own inimitable style:
@alansmurray Yes, it was material to you — BS article increased your advertising revenue. Just wasn't material to TSLA, as shown by market.— Elon Musk (@elonmusk) July 5, 2016
@alansmurray If you care about auto deaths as material to stock prices, why no articles about 1M+/year deaths from other auto companies?— Elon Musk (@elonmusk) July 5, 2016
The NHTSA is now investigating the autopilot function in Tesla's Model S cars. Separately today, the agency released statistics on traffic deaths related to human-driven cars, which it said rose to 35,200 last year, up from 32,675 the year before.
[Photo: Flickr user Steve Jurvetson]