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.
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, he wrote.
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.
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