Web images of Tesla S in flames drive carmaker's stock down 6 per cent
Reuters in Detroit
Tesla Motors shares fell 6 per cent on Wednesday after an automotive blog published images of a Model S electric sedan in flames after an accident on Tuesday morning just south of Seattle, Washington.
The blog, called Jalopnik, posted pictures and a video of the Model S fire on Wednesday. Tesla confirmed the authenticity of the images and said the car caught fire after the driver ran over a “large metallic object”, causing extensive damage to the front end of the car.
Tesla shares fell 6.2 per cent to US$180.95 on the Nasdaq, their biggest one-day decline since mid-July.
It is unclear if the Model S lithium-ion battery pack was damaged. Firefighters found it difficult to quash the flames, and fire damage made it tough to determine the impact of the object on the car, Chris Webb, a spokesman for the Washington State Patrol, said.
The driver told state troopers he struck metal debris while on State Route 167 at about 8.18am local time on Tuesday, in Kent, a city about 30 kilometres south of Seattle.
The car’s alert system instructed the driver to pull over, and he got off the highway and out of the vehicle, Tesla said in a statement.
“The driver stated that he began to smell something burning, and a short time later the vehicle caught fire,” Webb said, citing information from the state trooper investigating the incident.
“It took the fire department several attempts to extinguish the flames, as it kept reigniting,” Webb said in an e-mail.
The car’s tires were burned up, and officials dispatched a flat-bed truck to remove the vehicle, he said.
Watch: The Tesla S ablaze after crashing near Seattle on Tuesday
The Model S, like many other “green cars”, is powered by lithium-ion batteries, a relatively new technology to the vehicle industry that is much more powerful than traditional lead-acid batteries but also carries a larger safety risk, battery experts have said.
Investors are wary of lithium-ion battery fires, because they could hurt consumer demand, at least in the short term, analysts have said.
Tesla spokeswoman Liz Jarvis-Shean had no immediate comment on the trooper’s description of the fire. She said the firm, which makes only electric cars, is studying the incident now.
Tesla’s sole vehicle for sale now is the Model S, although the Model X crossover is on the horizon.
Separately on Wednesday, Robert W. Baird & Co analyst Ben Kallo downgraded Tesla shares to “neutral” from “outperform”.
So far this year, Tesla shares have surged more than 400 per cent, buoyed by the successful launch of the Model S. But some investors and analysts believe the stock is overvalued.
Tesla’s market value is about US$23 billion, nearly half that of General Motors, which is worth US$49 billion.
“TSLA [the firm’s Nasdaq stock code] has several significant milestones over the next 18 months, including continued production ramp and the introduction of the Model X,” Kallo said in a note.
“We believe solid execution on both of these fronts is already priced into the stock, and any hiccups in execution present stock price risk in the near to intermediate term.”