Could Tesla (TSLA) Face a 'Range-Gate' Scandal?

Bearish Tesla (NASDAQ: TSLA) analyst Gordon Johnson of GLJ Research thinks the EV maker could find itself in a "range-gate" scandal as multiple news outlets report that the company's cars are missing their advertised EPA range estimates by about 25%.

Johnson highlights the following:

Car and Driver – https://www.caranddriver.com/features/a33824052/adjustment-factor-tesla-uses-for-big-epa-range-numbers/ (from article: “We were especially curious because our own 75-mph highway testing shows Teslas, on average, miss their label range by 27 percent”);

What Car? – https://www.thisismoney.co.uk/money/cars/article-7364605/Test-reveals-range-Teslas-Model-3-90-miles-claimed.html (from article: “That's 58 miles shy of the claimed distance between charges - almost a quarter (23 per cent) less than the Tesla sales brochure will lead you to believe.”); and

Edmunds – https://www.edmunds.com/car-news/electric-car-range-and-consumption-epa-vs-edmunds.html (from article: “Every Tesla we've tested has failed to hit its EPA range estimate”).

Johnson further highlighted that this is how Car and Driver summed up how TSLA potentially “games” its range:

“Digging into the specifics of EV range quickly uncovers a rabbit hole of dense technical documents, such as the SAE's 32-page J1634 standard that governs range and efficiency testing. Here's the summary: EVs are strapped to a dynamometer—essentially a treadmill for cars—and repeatedly run through a test regimen that ends only when the battery is depleted to the point that the vehicle can no longer maintain the required speed. This procedure uses the same EPA city cycle (20-mph average speed over 7.5 miles with 18 stops) and highway cycle (48-mph average speed, 10.3 miles) used for fuel-economy tests of all light-duty vehicles. Both cycles feature extremely gentle driving; the most aggressive acceleration would be equivalent to an 18-second 60-mph time. Between city and h"ighway loops, the test calls for a steady speed of 55 or 65 mph to deplete the battery. The EPA knows these low-speed tests aren't representative of the real world, so every EV's window-sticker range is the product of an adjustment factor that yields a more realistic consumer-facing figure.”

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