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| Car fire a test for high-flying Tes |
| Car fire a test for high-flying Tesla
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| UNITED STATES OF AMERICA
, 4-October-2013
5:37:38 AM |
| It's an automaker's worst nightmare: graphic video footage of one of its cars engulfed in flames after an accident.
In the case of Tesla Motors, the fire that destroyed a Model S electric car Tuesday is a stunning reality check for a company that has garnered almost unanimous praise for its battery-powered vehicles.
The fire, on a highway exit in Kent, Wash., poses a serious challenge for Tesla and, at the same time, prompts new questions about the safety of lithium-ion batteries in electric cars.
Investors have already punished Tesla's high-flying stock. The company's shares fell sharply for a second straight day Thursday after video of the Model S fire was featured prominently on websites. The shares, which have nearly quadrupled in the past year as Tesla's fortunes soared, closed at $173.31, about 10 percent off the high it reached earlier in the week.
But the larger issue will be how Tesla handles the intense scrutiny from the fire, including a likely investigation by federal regulators.
"Tesla was a success story where everything was going their way," said Karl Brauer, an analyst with the auto-research firm Kelley Blue Book. "The question now is, how do they deal with this adversity?"
Tesla has said the Model S in Washington hit a "large metallic object" that damaged one of the modules in its liquid-cooled battery pack, which is on the underside of the vehicle.
The company has yet to say whether it is considering changes to the car to prevent similar accidents.
And it may be some time before the National Highway Traffic Safety Administration weighs in on whether the Model S will be investigated.
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