By Jerry Hirsch, October 4, 2013
2013 Tesla Model S
Tesla Motors Chief Executive Elon Musk
moved Friday to put out the financial fire that resulted from when one
of the electric car company’s expensive Model S hatchbacks burned up on a
roadway near Seattle this week.
Writing on Tesla’s website,
Musk explained how a big chunk of metal that fell from a semi-trailer
impaled the undercarriage of the car and started a fire that was
contained to the front battery module.
“Had a conventional gasoline car encountered the same object on the highway, the result could have
been far worse,” Musk wrote.
The fire raised concern that
the luxury car might have some sort of flaw with its lithium-ion battery
system that could be costly to fix or would spook potential buyers.
Tesla shares plunged from $193 at the close of trading Tuesday to an
intraday low of $168 on Thursday, a 13% decline, before rebounding to
close at $180.98 on Friday. Tesla has seen a huge run-up in its stock
this year as it has ramped up sales of its luxury electric cars, which
start around $70,000. The stock was $35.36 on Jan. 2.
Musk wrote that the fire was contained to the front of the car by
internal firewalls in the battery pack. Vents built into the battery
pack directed the flames down toward the road and away from the vehicle,
A quarter-inch of armor plate protecting the base of the vehicle and
other safety features helped protect the car and stopped the fire from
spreading quickly, Musk added in his defense of electric car technology.
“A typical gasoline car only has a thin metal sheet protecting the
underbody, leaving it vulnerable to destruction of the fuel supply lines
or fuel tank, which causes a pool of gasoline to form and often burn
the entire car to the ground,” Musk wrote.
Musk said the early data for electric car use shows that they are less prone to fires than gasoline vehicles.
“For consumers concerned about fire risk, there should be absolutely
zero doubt that it is safer to power a car with a battery than a large
tank of highly flammable liquid,” he wrote.
On Thursday, Wedbush Securities analyst Craig Irwin told investors that
he did not believe the fire would have long-term consequences for the
Palo Alto, Calif., auto company and predicted that the stock would
bounce back to $180.
“Most of the current Model S buyers are either technology-savvy early
adopters or environmentally conscious consumers with thick wallets, and
we believe both groups will already understand the risks of a lithium
fire and likely calibrate this recent event as of relatively minor
importance,” Irwin said.
Still, safety officials have been tracking fires in electric cars, as
well as computers and other equipment, out of concern that the
lithium-ion battery systems might be prone to fires.
"This points to the wide variety of crash results that can't be
tested in a lab and will only be discovered through inevitable
real-world accidents that occur as electric cars become more prominent
on our roads," said Karl Brauer, senior analyst at Kelley Blue Book.
This year, federal regulators grounded Boeing
787 planes for four months after batteries on two of the planes
overheated, with one catching fire. Boeing ordered modifications to the
jets to increase ventilation and insulation near the batteries, but the
company and investigators did not determine the root cause of the
Last year, the Chevrolet Volt plug-in hybrid came under increased
scrutiny when a series of fires ignited after test crashes of the
vehicle and its battery pack. General Motors Co.
said the fires were caused by a coolant leak and short circuit that
occurred when the car’s battery pack was punctured during severe side
test crashes by the National Highway Traffic Safety Administration. GM subsequently modified the vehicles to prevent the problem.