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Tesla says fire controversy hurt demand, credits social media for spreading truth

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Tesla Model S fire
Tesla Model S fire

Those images and videos of Tesla's Model S engulfed in flames had a very real impact on demand for the electric luxury car. During today's Q4 earnings call with investors, CEO Elon Musk admitted as much, saying "At first we saw a significant drop in demand, and we were quite worried about it." The trouble started last year, when Tesla was caught in an unlucky streak involving several high-profile Model S incidents. Throughout the ordeal, no drivers were ever seriously injured, and Musk staunchly defended the safety of Tesla's prized EV — especially when compared to regular gasoline-powered cars. At the time, he accused some in the media of "seeking to make a sensation out of something that a simple Google search would reveal to be false." Tesla did all it could to assuage car buyers; at one point the company requested a federal safety review of the fires. The results of that inquiry are still incoming, but Musk expects a positive outcome.

"In the absence of social media, I'm not sure we would've been able to correct this perception."

Musk still points the finger of blame for this "controversy" at alarmist headlines and reports. "As consumers came to understand that this was really kind of a media-driven thing and not a real danger with the car, our sales have improved steadily since then, he said, adding, "Their fears have subsided." Tesla's CEO credited Twitter and other social networks for helping to spread the facts and extinguish panic. "I think it's great that we live in an era where there's the internet and social media, so that when the flames are fanned by the media, there's at least a path for consumers to understand what is really going on," he said. "In the absence of social media, I'm not sure we would've been able to correct this perception." But correct it they did: Tesla sold a record 6,892 Model S vehicles in the fourth quarter, and the company aims to sell 35,000 in 2014.