Tesla Motors Co shares sank 6% on Wednesday after an information of Model S catching on fire has been published by automotive blog after an accident on Tuesday morning just south of Seattle, Washington.
The auto Web site Jalopnik.com posted photographs from a reader showing a Tesla Model S on fire. Shortly after the high-flying stock was downgraded by an investment house.
Tesla confirmed that one of its cars caught on fire after the driver struck unidentified metal debris on the roadway. The crash caused “significant damage to the vehicle,” Tesla said, adding that the car’s alert system signaled a problem and instructed the driver to pull over safely. No one was injured. A fire then caused “substantial damage” to the front of the vehicle. Tesla said that the design and construction of the vehicle and battery pack limited the spread of the fire, which was extinguished by the local fire department.
“All indications are that the fire never entered the interior cabin of the car,” Tesla said in its statement. “It was extinguished on-site by the fire department.”
The Model S Tesla car is a fully electric car with its battery pack housed in the floor of the vehicle. Tesla said the fire started when the metallic object directly hit one of the 16 modules within the Model S battery pack.
Investors are very sensitive to the topic of lithium-ion battery fires because they could hurt consumer demand, at least in the short-term, analysts have said.
Earlier this year, federal regulators grounded Boeing 787 planes for four months after batteries on two planes overheated, causing fire. Boeing later ordered modifications to the jets to increase ventilation and insulation near the batteries, but the company and investigators never determined the root cause of the overheating.
Tesla has made a car of outstanding safety, recently boasting that the Model S sedan would have gotten more than five stars in government crash tests if the scale had only gone that high. The car has also gotten rave reviews from magazines like Motor Trend, Automobile and Consumer Reports.
The current consensus among 15 polled by CNN Money investment analysts is to hold stock in Tesla Motors Inc. This rating has held steady since September, when it was unchanged from a hold rating. Share price have been up more than 430% year-to-date.
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