Tesla shares slump after report of car fire

A blaze that ruined a Model S sedan takes a toll on the stock, even though questions about the incident are still unanswered.

By MSN Money Partner Oct 3, 2013 11:41AM

Updated 2:30 p.m. ET


From The Associated Press


A fire that destroyed a Tesla electric car near Seattle began in the vehicle's battery pack, officials said Wednesday, creating challenges for firefighters who tried to put out the flames.


Company spokeswoman Liz Jarvis-Shean said the fire Tuesday was caused by a large metallic object that directly hit one of the battery pack's modules in the pricey Model S. The fire was contained to a small section at the front of the vehicle, she said, and no one was injured.

Shares of Tesla Motors (TSLA) were down by nearly 7 percent at one point Thursday, but recovered to a 4 percent loss in the afternoon, after an Internet video showed flames spewing from the vehicle that Tesla has touted as the safest car in America.


The liquid-cooled 85 kilowatt-hour battery in the Tesla Model S is mounted below the passenger compartment floor and uses lithium-ion chemistry similar to the batteries in laptop computers and mobile phones. Investors and companies have been particularly sensitive to the batteries' fire risks, especially given issues in recent years involving the Chevrolet Volt plug-in hybrid car and Boeing's new 787 plane.


In an incident report released under Washington state's public records law, firefighters wrote that they appeared to have Tuesday's fire under control, but the flames reignited. Crews found that water seemed to intensify the fire, so they began using a dry chemical extinguisher.


After dismantling the front end of the vehicle and puncturing holes in the battery pack, responders used a circular saw to cut an access hole in the front section to apply water to the battery, according to documents. Only then was the fire extinguished.Tesla Motors CEO Elon Musk drives a Model S at the Tesla factory in Fremont, Calif. on October 1, 2011 (© Stephen Lam/Newscom/Reuters)


The incident happened as the Tesla's driver was traveling southbound on state Route 167 through the Seattle suburb of Kent, said Trooper Chris Webb of the Washington State Patrol. The driver said he believed he had struck some metal debris on the freeway, so he exited the highway and the vehicle became disabled.


The driver, who did not return a phone call seeking comment, told authorities he began to smell something burning and then the vehicle caught fire.


Firefighters arrived within 3 minutes of the first call. It's not clear from records how long the firefighting lasted, but crews remained on scene for 2 1/2 hours.


Tesla said the flames were contained to the front of the $70,000 vehicle due to its design and construction.


"This was not a spontaneous event," Jarvis-Shean said. "Every indication we have at this point is that the fire was a result of the collision and the damage sustained through that."


There was too much damage from the fire to see what damage debris may have caused, Webb said.


The automobile website Jalopnik.com posted photos of the blaze that it says were taken by a reader, along with a video.


Shares of Palo Alto, Calif.-based Tesla have risen more than 400 percent this year. But some investors likely were alarmed that the fire could be an indication of a flaw in the company's battery packs, and Tesla shares fell $12.05 to $180.95 Wednesday.


Also contributing to the stock's decline was a rare analyst downgrade. R.W. Baird analyst Ben Kallo cut his rating on the stock from "outperform" to "neutral," telling investors that while he's still bullish on Tesla's long-term prospects, the company has "significant milestones" during the next 18 months that come with risk.


The company's battery system and the Model S itself have received rave reviews, including a top crash-test score from the National Highway Traffic Safety Administration and a tie for the highest auto rating ever recorded by Consumer Reports magazine.


But lithium-ion batteries have raised concerns in other vehicles. Two years ago, battery fires broke out in three Chevrolet Volt plug-in hybrid cars after crash-testing, but NHTSA investigators determined that the Volt was no more risky than vehicles with conventional gasoline engines.


Officials from General Motors (GM) and the government believed the fires were caused by coolant leaking from damaged plastic casing around the batteries after side-impact test crashes. At the time, they said there were no real-world fires in any Volts.


Still, the fires tarnished the Volt's reputation and cut into sales. Recently, though, sales have recovered. Sales are up about 3 percent this year, with GM selling about 17,000 Volts through September.

Earlier this year, Boeing Co.'s worldwide fleet of 787s was grounded because lithium-ion batteries overheated or caught fire. Flights resumed four months later after a revamped battery system was installed.


Under normal circumstances, investigators from NHTSA, the government's auto safety watchdog, would travel to Washington state to investigate the Tesla crash. But with the partial government shutdown, NHTSA's field investigations have been suspended.


More from MSN Top Stocks

Tags: FGMTSLA
9Comments
Oct 3, 2013 12:29PM
avatar
Yep, gasoline powered vehicles never, ever go up in tlames, lol..
avatar

ROFL

 

Lithium burns in the atmosphere at normal room temperatures and burns in water which is really good because it steals the O from H2O and produces hydrogen which then rises above the water into the atmosphere and burns with O2 in the air like the Hindenburg disaster. Only thing is hydrogen burning is almost invisible in the air (the skin of the Hindenburg is what you are seeing in the film clip of the disaster.

 

So putting water on the fire only made it worse but then that is to be expected because the Telsa cars do not have a haz mat code to tell firefighters how to fight the fire.

 

I have seen a Telsa on display and they have this thin walled battery casing not even 1/16 of an inch thick to protect it. Pretty much a very strong man with a stainless steel spear with a sharp point can poke holes in the casing all day long and cause the battery to burn up.

 

Oh that is what the fire fighters did LOL LOL

 

Lithium batterys are like 1/10 lighter than Nickel Metal Hydrate batteries and only produce like 1/10 the energy that Nickel Metal Hydrate batteries do so you gain like a 15 percent advantage and have a much more burnable battery to boot. Sure if you power up the Nickel Metal Hydrate batteries too fast you can produce hydrogen gas and have a fire due to the hydrogen burning but that is not as serious as the Lithium burning.

 

Lithium batteries are cool and all that specially when they burn.

Oct 3, 2013 3:28PM
avatar

That wasn't a car fire---that's a "thermal event"....I guess Pentagonease has spread elsewhere such as "collateral damage" which means civilians being killed, etc. 

Oct 3, 2013 4:14PM
avatar
As if carrying around 5-12 gallons of high combustible ls any safer.
Oct 3, 2013 6:49PM
avatar

Well, were all the toxic chemicals contained ??

 

Is a Tesla the new Pacer or was it a Gremlin...You know the ones that caught fire when bumped hard.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
266
266 rated 2
485
485 rated 3
660
660 rated 4
586
586 rated 5
652
652 rated 6
640
640 rated 7
504
504 rated 8
289
289 rated 9
159
159 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.