Tesla Falls for Second Day as Car Fire Prompts QuestionsBill Koenig
Tesla Motors Inc. fell for a second day after an Oct. 1 fire in one of its vehicles raised questions about the car’s safety, prompting the electric-car maker to issue a statement citing a collision as the cause.
Tesla slid 4.2 percent to $173.31 at the close in New York, the lowest since Sept. 18. The shares tumbled 6.2 percent yesterday after a picture of a Model S on fire in Washington state was published by the Jalopnik website.
The decline, totaling 10 percent over two days, reflects concerns that the incident may tarnish the automaker, which has a stock-market valuation of more than $21 billion. Shares of the company led by Chief Executive Officer Elon Musk, have soared fivefold this year as the electric-car maker posted its first quarterly profit and started expanding to Europe and Asia.
“Although this incident will likely weigh on near-term sentiment, we do not expect this to derail near-term Model S orders and delivery momentum,” Craig Irwin, an analyst in New York for Wedbush Securities, wrote in an investor note today.
Model S buyers are likely to “understand the risks of a lithium fire and likely calibrate this recent event as of relatively minor importance,” wrote Irwin, who rates the shares neutral, the equivalent of hold.
The Model S “collided with a large metallic object in the middle of the road, causing significant damage to the vehicle,” Palo Alto, California-based Tesla said in an e-mailed statement. The driver exited the vehicle safely and called authorities. A fire caused by damage sustained in the crash was contained, Tesla said.
Debris that may be related to the Kent, Washington, collision was collected by the state’s Transportation Department, the Washington State Patrol said yesterday in a statement. The collision report should be available in a few days, the agency said.
“The driver stated that he began to smell something burning and a short time later the vehicle caught on fire,” according to the State Patrol statement. An emergency crew had to make “several attempts to extinguish the flames as it kept reigniting,” according to the statement.
Flames also burned in the car’s battery pack, the Associated Press reported, citing comments made by firefighters in a copy of an incident report the news service said it obtained under state public records laws.
The U.S. National Highway Traffic Safety Administration normally sends teams of investigators to high-profile or unusual vehicle crashes. The agency investigated the causes of fires in a plug-in General Motors Co. Chevrolet Volt and in Fisker Automotive Inc. Karma sedans. Both of those investigations led to recalls.
The regulator’s employees who conduct such investigations are furloughed because of the U.S. government shutdown and the agency is prohibited from doing any work on vehicle safety matters or discussing them, the NHTSA said in an e-mailed statement today. Only those who work on programs such as those involving roadway safety, funded by the highway trust fund, are still on the job.
“During the federal government shutdown some key agency functions have been discontinued until funding is restored,” the agency said.
NHTSA uses its own investigators and contractors and works with state safety officials to probe causes of accidents that may involve vehicle defects. The agency’s results can put an end to uncertainty and speculation about what may have caused an accident or fire.
Tesla plans this year to deliver 21,000 of its flagship Model S sedans, priced from about $70,000, and double that volume next year as sales in Europe and Asia expand. Tesla also plans to introduce a Model X sport-utility vehicle in late 2014 and a smaller, mass-market electric car.
“Tesla cannot weather a sustained onslaught of consumer complaints and incidents that could potentially dent the demand curve for the next vehicle,” James Albertine, an analyst with Stifel Nicolaus & Co., wrote in a report today. Albertine has a hold rating on Tesla.