Being a media darling isn't as easy as it looks. When something goes wrong, the whole world is going to be talking.

This year, electric-car maker Tesla Motors will account for less than 0.05% of the world's passenger car output. Yet within the financial media bubble, it seems like it generates 99% of auto-industry headlines. A few short months ago, that was a good thing. But now we're seeing the flip side of the coin.

To the Moon!

Tesla's ascendancy to the spotlight came courtesy of two factors: a unique CEO and an outstanding product.

Iron Man

Elon Musk is the most interesting CEO in America. Not only does he make electric cars and rockets (through SpaceX), but he also presented an idea for a warp-speed, low-cost bullet-train substitute called Hyperloop. As well, he was a driving force behind online-payment giant PayPal, which is now owned by eBay, and solar company SolarCity.

How many other people have had their hands in so many large-scale technological revolutions in such a short period of time?

Musk's accomplishments led people to start comparing him to genius/playboy superhero Tony Stark, a.k.a. Iron Man (though some people think he's a jerk...):

And to some extent, he's filled the void left by the greatest tech-industry icon of all time -- Apple's Steve Jobs.

The Model S

A charismatic leader without a great product or service doesn't amount to much. And just as Steve Jobs had the iPhone, Musk has the Model S sedan, which has been nothing short of a critical sensation.

Several media outlets, including Motor Trend, named the Model S car of the year and in May, Consumer Reports gave it a 99/100 score -- its highest-ever rating for a car. It wasn't awesome for an electric car. It was awesome, period, combining superb power and performance with excellent handling and sharp looks.

On August 19, the news got even better for Tesla. National Highway Traffic Safety Administration tests indicated that the Model S received a five out of five rating in every safety category.

And in a test designed to measure the integrity of the roof, a machine tried to crush it… and broke. How's that for headline fodder? For Musk and Tesla, it was like a dream.

By September 30, Tesla's stock shot up to $194.50 for a whopping 474% year-to-date return, aided of course by strong earnings earlier in the year.


On October 2, the stock took a 6% dip as a video of a Model S on fire in Washington state from the day before started making the rounds. Then on November 6, another Model S caught fire in Tennessee.

Both of these fires were the result of Model S batteries being damaged by metal objects underneath the car. And in each case, the owners were not at all fazed and in fact wanted new Teslas to replace their burnt-up ones.

There was also a fire on October 17 in Mexico when a drunk driver got in a high-speed crash.

Three battery fires in six weeks? That certainly didn't jibe with the car's image as one of the safest on the road, and it became a hot topic.

Time for Defense!

In response to the October 1 fire, Musk wrote a detailed blog post explaining the accident, including the following passage:


The nationwide driving statistics make this very clear: there are 150,000 car fires per year according to the National Fire Protection Association, and Americans drive about 3 trillion miles per year according to the Department of Transportation. That equates to one vehicle fire for every 20 million miles driven, compared to one fire in over 100 million miles for Tesla. This means you are five times more likely to experience a fire in a conventional gasoline car than a Tesla!

And in the case of the November 6 fire, the actual owner of the car posted the following on the Tesla blog:


There's no upside to potential safety issues with an emerging technology like electric cars, but these are very effective responses, considering the situation.

And Then There Was That Whole Earnings Thing...

On November 5, Tesla reported third-quarter earnings, but with expectations sky-high, investors were disappointed with the company's profitability and pace of vehicle deliveries.

Combined with the safety issues that had been driving volatility in the stock, the financial disappointment put real fear in the hearts of the bulls.

You can see it in this chart, which shows the 38% decline off the high

A Crisis of Confidence?

On November 18, Musk wrote a new blog post entitled "The Mission of Tesla," where he did two things.

First, he correctly pointed out that there has been disproportionate media coverage of the Tesla fires:


And secondly, he announce three important actions: The company rolled out a software update that would result in greater ground clearance at highway speeds, requested an investigation from the NHTSA, and amended its warranty policy to cover fire damage, even in the event of driver error.

In response, the NHTSA directly contradicted Tesla's claim of requesting an investigation with this statement:

NHTSA's decision to open any formal investigation is an independent process. In regards to Tesla, the agency notified the automaker of its plans to open a formal investigation and requested their cooperation, which is standard agency practice for all investigations. The automaker agreed to do so.

An NHTSA filing indicates that the investigation was opened on November 15:

A Bloomberg report quotes Tesla VP Jim Chen as saying the company requested the investigation that same day.


If the Model S is all it's cracked up to be safety-wise, then why are all these changes necessary?

If the fires can be chalked up to coincidental flukes, and a Tesla is statistically safer than traditional gasoline-powered vehicles, why is the company responding so aggressively? And how did it get itself mixed up in this back-and-forth with the NHTSA?

The Other Side

Tesla is seeing the other side of being the next big thing in the automotive industry, and it can't be an easy situation after such smooth sailing.

The Model S catapulted the company into the limelight in a huge way, and Tesla can't simply disappear when the news flow is heading in the wrong direction.

We don't know yet whether this whole mess will actually result in weaker sales of Tesla cars, but the company must see that as a possibility, and certainly, investors are a bit freaked out.

But one thing's for certain: Tesla's on the defense, fighting the same media cabal that pumped its stock up to $194.

Talk about change.

This story originally appeared on Minyanville.

MORE: from Minyanville:

VERIZON: Verizon Shocks Android Users With Rare Competence

APPLE: Samsung Lawyers Accuse Apple of Playing the Race Card

COMPANIES: The Top 11 Fastest-Growing Industries

Read or Share this story: http://usat.ly/I5RUBs