Tesla car fire worries investors

Shares in the electric car company dipped Wednesday on news of a car fire outside of Seattle earlier this week. Investors are wary of the potential hazards of lithium-ion batteries, which power 'green cars' like Tesla's Model S.

REUTERS/Mike Blake/Files
A Tesla Model S electric car is shown for sale at a Tesla store in a shopping mall in La Jolla, California in this September file photo. A car fire this week caused Tesla's shares to plummet Wednesday.

Tesla Motors Co shares fell 6 percent 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 percent to $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 that he struck metal debris while on State Route 167 around 8:18 a.m. local time on Tuesday, in Kent, a city located some 20 miles south of Seattle, he said.

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 on 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 email. The car's tires were burned up and officials dispatched a flat bed truck to remove the car, he said.

The Model S, like many other "green cars," is powered by lithium-ion batteries, a relatively new technology to the auto industry that is much more powerful than the 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 added that Tesla, which exclusively makes electric cars, is studying the incident now.

Tesla's only 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 percent, buoyed by the successful launch of the Model S. But some investors and analysts believe the stock is over-valued.

Tesla's market value currently is around $23 billion, nearly half that of General Motors Co, which is worth $49 billion.

"TSLA 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."

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.