Tesla’s third fire accident drives shares down 7.5%

Tesla Model S electric car has caught on fire this week after hitting road debris on a Tennessee freeway. This is the third reported fire in a Model S in less than a month and a half.

The accident happened on Wednesday afternoon near Smyrna, Tennessee. The fire, similarly to previous accidents, engulfed the front of the car. A spokeswoman for the Tennessee Highway Patrol says the Model S ran over a tow hitch, which hit the undercarriage of the car, causing an electrical fire.

Its the second Model S blaze involving road debris. In early October, a driver near Seattle hit debris that pierced a shield and the battery pack, causing a fire. In the other fire, a driver in Mexico crashed into a concrete wall and a tree at a high speed.

Shares of the car-maker, slumped 7.5% to $139.77 on Thursday adding to the Wednesdays plunge of 14.5%, after concerns about a battery shortage, as well as the costs Tesla will incur as it builds more cars. The shares are still up 312% this year.

Karl Brauer, a senior analyst at Kelley Blue Book, explained the sharp decline: “For a company with a stock price based as much or more on image than financials, those recurring headlines are highly damaging.”

The driver who was able to pull onto an emergency lane and escape said the car saved his life according to Teslas spokeswoman. Tesla said it has sent a team to investigate. Company spokeswoman Liz Jarvis-Shean says the fire was not spontaneous. The car-marker CEO Elon Musk has said that the design of the Model S is safer than that of a car with a conventional fuel tank.

The National Highway Traffic Safety Administration, the U.S. governments auto safety watchdog, says the agency will contact Tennessee authorities to determine if there are safety problems that need further action. NHTSA decided last month not to investigate the Seattle-area fire, saying there was no evidence it was caused by a safety defect. According to the U.S. Fire Administration, there are around 194,000 vehicle fires on U.S. roads each year.