Tesla Issues Statement On Fiery Car Crash (TSLA)

TSLA stock is down on news of a Model S car accident

   
Tesla Issues Statement On Fiery Car Crash (TSLA)

Tesla (TSLA) stock is down 6.5% to a low of $169 so far today.

It appears that shares began to tumble in the last half hour Thursday on reports that a Tesla Model S car caught fire on Washington State Route 167.

Some speculated that the video highlights problems with the car’s battery. Though others rushed to point out that the battery is located in the back of the car.

Here is Tesla’s response to the accident via Jalopnik:

“Yesterday, a Model S collided with a large metallic object in the middle of the road, causing significant damage to the vehicle. The car’s alert system signaled a problem and instructed the driver to pull over safely, which he did. No one was injured, and the sole occupant had sufficient time to exit the vehicle safely and call the authorities. Subsequently, a fire caused by the substantial damage sustained during the collision was contained to the front of the vehicle thanks to the design and construction of the vehicle and battery pack. All indications are that the fire never entered the interior cabin of the car. It was extinguished on-site by the fire department.”

In its 10-Q Tesla noted:

“Our vehicles make use of lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame, and such events have raised concerns, and future events may lead to additional concerns, about the batteries used in automotive applications.

“The battery pack in the Tesla Roadster and Model S makes use of lithium-ion cells. We also currently intend to make use of lithium-ion cells in battery packs that we sell to Toyota and Daimler as well as any future vehicles we may produce. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. Highly publicized incidents of laptop computers and cell phones bursting into flames have focused consumer attention on the safety of these cells. More recently, multiple Chevrolet Volt battery pack fires, followed by a government investigation into the cause of such fires focused considerable public attention, as well as the attention of NHTSA, on the safety of electric vehicles.

“These events have raised concerns about the batteries used in automotive applications. To address these questions and concerns, a number of cell manufacturers are pursuing alternative lithium-ion battery cell chemistries to improve safety. We have designed the battery pack to passively contain any single cell’s release of energy without spreading to neighboring cells and we are not aware of any such incident in our customers’ vehicles. However, we have delivered only a limited number of Tesla Roadsters and Model S sedans to customers and have limited field experience with our vehicles, especially Model S. We have also only delivered a limited number of battery packs to Toyota and Daimler. Accordingly, there can be no assurance that a field or testing failure of our Model S or other battery packs that we produce will not occur, which could damage the vehicle or lead to personal injury or death and may subject us to lawsuits. We may have to recall our vehicles or participate in a recall of a vehicle that contains our battery packs, and redesign our battery packs, which would be time consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells such as a vehicle or other fire, even if such incident does not involve us, could seriously harm our business.”

Earlier today, Baird analyst Ben Kallo downgraded Tesla to neutral, from outperform based on valuation.

“Since our initiation, TSLA has significantly outperformed the market through solid execution, technology validation, and brand creation. Although we continue to be bullish on TSLA’s long-term prospects, we think the stock appreciation reflects its technological leadership and several milestones that could contain execution risk. We would look to become more constructive on execution related pullbacks or significant advances in battery technology.”

The stock is still up 400% year-to-date.

Here’s the video that’s being passed around:

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Article printed from InvestorPlace Media, http://investorplace.com/2013/10/tesla-issues-statement-on-fiery-car-crash-tsla/.

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