Seeking Alpha

Tesla lower after Model S catches fire

  • Tesla Motors (TSLA) says a fire which started in a Model S began in the vehicle's battery pack following an accident.
  • Firefighters had to use a dry chemical extinguisher to douse the flames at the accident site near Seattle.
  • The driver of the car said a metal object was struck which caused the fire. (YouTube video of fire).
  • TSLA -3.5% premarket to $174.59.
Comments (47)
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    I recently wrote an article "Tesla:Can We Talk" (http://bit.ly/15NxVwC) in which I tried to outline the good/bad for TESLA.

     

    In the article I hypothesized about a potential battery fire and the effect it could have on stock price. Excerpt.....

     

    "Consider that the "S" is marketed to the affluent for functionality and status/image. If it loses that, it loses all. Now, the "S" has only been out a short period of time. What if just one battery catches fire (Boeing 787)? TSLA will drop like a lead balloon. What if a second or third? TSLA is finished. Even if it turns out to be technically manageable, image is everything, especially to a small company. AUDI survived (just barely) its acceleration problem, TSLA may not."

     

    Needless to say I was bombarded by the TESLA bulls about how this could never happen because ..yada,yada....

     

    Perhaps, now, some bulls can open their ideological eyes and try to look at this more realistically.

     

    I still like the car, neutral on the company, concerned about the stock.
    3 Oct 2013, 07:17 AM Reply Like
  • Bleecker Street Research
    , contributor
    Comments (468) | Send Message
     
    I'll give it a shot. A car catches fire roughly ever 97 seconds. There are around 250 million cars on the road, and about 260,000 vehicles catch on fire every day. This means that there is one fire for ever ~960 cars. There are about 15,000 Model S's on the road. I am actually surprised that there hasn't been a fire yet. That being said, I really wish it wasn't related to the battery, and just by looking at the video I didn't think it was. This story keeps getting weirder.
    3 Oct 2013, 08:05 AM Reply Like
  • Yesterdays_news
    , contributor
    Comments (1127) | Send Message
     
    The question is why?

     

    Design Flaw? Recall??????
    3 Oct 2013, 08:50 AM Reply Like
  • RUCE88
    , contributor
    Comments (51) | Send Message
     
    I think that the reported large metal object on the road ripped the underside, and caused a short and fire in the battery pack. I think drivers reporting on a car fire from now on need to specify if it is an EV, since firefighters need to use something other than water.
    3 Oct 2013, 09:06 AM Reply Like
  • positivethoughts
    , contributor
    Comments (1809) | Send Message
     
    CIA? Another Michael Hastings type hit?
    3 Oct 2013, 09:29 AM Reply Like
  • juan213
    , contributor
    Comments (6) | Send Message
     
    Seems to me the issue here was responders lack of knowledge on how to attack the fire. Im sure it will be looked at but it seems apparent the driver knew he hit something hard, enough to pull over and check. so this is not a design issue with the vehicle, as another vehicle would have completely burned down and you forget with gas it could have fully exploded the entire vehicle. the design actually helped contain the fire very well and better than any other vehicle fire. This will actually help awareness of newer technologies to first responders...
    3 Oct 2013, 09:36 AM Reply Like
  • Retired2thDoc
    , contributor
    Comments (90) | Send Message
     
    Checking this out with my son-in-law Fire Chief.

     

    Great observation.

     

    Thanks
    3 Oct 2013, 11:02 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5352) | Send Message
     
    Do not spray water on an electrical fire.
    3 Oct 2013, 11:15 AM Reply Like
  • David Pinsen
    , contributor
    Comments (1048) | Send Message
     
    Could you provide a link for the claim that 260k cars catch fire everyday? I remember when that Rolling Stone reporter's car (a mercedes, IIRC) crashed and burst into flames in Los Angeles a few months ago, conspiracy theorists raised red flags about that, claiming that it was extremely rare for cars to burst into flames.

     

    The first thing that came to mind when I saw the Tesla video was Fisker, but Fisker's electric cars spontaneously burst into flames when parked, which was even worse. At least this one allegedly hit an object. In any case, for longs worried about more fires, here is one way to protect the stock: http://bit.ly/18SRis9
    3 Oct 2013, 11:25 AM Reply Like
  • Achilz
    , contributor
    Comments (102) | Send Message
     
    This may be the start of the big sell off but I think not. The fire wasn't serious enough to have the type of impact you're considering. The cause is unclear and the vehicle alerted the driver to get out of the car, which he did, safely. Compared to a fire in an internal combustion vehicle, this was remarkably controlled and safe. Biggest problem was that first responders didn't know how to deal wiith it.
    Plus, we have an earnings report next month. My hypothesis is that this will be short term bad, long term neutral, for the stock and for sales.
    3 Oct 2013, 07:48 AM Reply Like
  • Tufenk
    , contributor
    Comments (961) | Send Message
     
    $TSLA, could be a re-entry point. Not spontaneous like 787. What if a metal object hit a gas tank in a "ice" car, the passenger could have fried. only issue is training for firefighters
    3 Oct 2013, 07:49 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi tufenk,

     

    Of course any car is subject to a fire. So, TESLA is not unique in this.

     

    However, the issue was not so much the fact that there was a fire, as it was the response to my statement that there might be a fire. Read the comments to the article. TESLA-philes, to a man, all insisted that there could be no fire. They "yada,yada'd" all the engineering reasons why there could be no fire. The battery was perfectly designed, etc, etc.

     

    This should be a wake-up call to the "philes". Not that it means the car is bad, or anything like that. Just that it's about time they started replacing ideology with some realism.

     

    If the "philes" can't see this, I wish them well in their investing.
    3 Oct 2013, 08:53 AM Reply Like
  • buildingyield4years
    , contributor
    Comments (303) | Send Message
     
    I wish you well in your attempt to get additional page views
    3 Oct 2013, 09:09 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi building,

     

    I can get as many page views as I want without commenting on this.

     

    All I need to do is write an article "Why I think TESLA Is the Greatest Stock of All Time" Guarantee winner...
    3 Oct 2013, 09:24 AM Reply Like
  • tombland
    , contributor
    Comments (117) | Send Message
     
    The many responses that you received of "there could be no fire" would have been based upon the premise of the battery spontaneously catching fire, like Fisker or Boeing. The Tesla Model S is still very very very unlikely to catch fire like that. Sure, it might happen one day in a defective car, but this fire is totally different and can't be lumped in with those fires.

     

    But of course a Model S could catch fire if it's driven over a stationary metal object and has it's battery ripped open. No engineering can account for that, just as no engineering can account for a metal object puncturing a typical car's gas tank and causing it to explode. The point you're trying to make doesn't really stand up.
    3 Oct 2013, 12:02 PM Reply Like
  • Fedagul
    , contributor
    Comments (8) | Send Message
     
    Ken, eighter you have a very shortsighted view on EV or you are short Tesla. When talking about people beiing afraid of a Tesla taking fire, they mean by itself, not like in this incident. This was a highspeed impact on the highway. The high-tech car told him to get off the road which he did. The damage then were so severe that it caused a fire. ONE Tesla has taken fire, and if you Ken think this is bad I would strongly advice never to get into a car filled with gasoline. I myself have got a car that was on fire, that was and ICE car, and it didnt even crash. That has NEVER happened to a model S. But I am not concerned if ignorant people did not want to have the car or the Tesla. The demand, especially in Europe is insane. (5months waiting list) Do some research on what a Tesla cost in Norway compared to a BMW M5 and you will change your position to long.
    3 Oct 2013, 08:00 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi Fedagut,

     

    First, you are dead wrong that I'm short TESLA. In fact, every author that writes an article must disclose any position. I have none.

     

    Why is it that TESLA-philes must assume everyone that doesn't come out with 100% rave TESLA comments is short?

     

    Secondarily, you miss the point. I was commenting more about how all the TESLAS-philes said that a battery fire was impossible. So my comment stands, isn't it about time to moderate the ideology with realism?
    3 Oct 2013, 08:48 AM Reply Like
  • Fedagul
    , contributor
    Comments (8) | Send Message
     
    LOL. You wrote "What if a second or third? TSLA is finished. Even if it turns out to be technically manageable, image is everything, especially to a small company. AUDI survived (just barely) its acceleration problem, TSLA may not."

     

    So if three Teslas over the years crashes and are on fire like any other car, TSLA is finished you say. Try thinking about that for a while. Think for yourself, and maybe you should come to realism and not just follow other the ignorant ones. This is not an issue whatsover. Also the cabin did not take fire at all, and only 1/16 of the battery caught fire. Do you think only a 1/16 of the gas on a gas-car will take fire, do you think it will reach the cabin. When they say a tesla fire is impossible its because they ment the fire started by itself. NEVER happened, but it has happened to alot of ICE cars. But you do not listen to this, cause you are just following the rest. But be my guest.
    3 Oct 2013, 09:15 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi fedagul,

     

    Sorry, not biting on your red-herring.

     

    You can try to divert the issue as much as you want, but this is not about the "S" or any other car. It is not about the fact that it caught on fire, or that any other car is susceptible to fire. It is not "S" vs. anything.

     

    It is all about the TESLA-philes that were in denial about even the possibility of a fire. It is all about the TESLA-philes that dismiss the possibility of any adverse condition.

     

    I didn't even mention (though I will now) how the TESLA-philes were so quick to claim no fires from the NHTSA crash tests.

     

    It would be wise to keep open the possibility that anything can happen. This latest news story just makes it relevant sooner rather than later.
    3 Oct 2013, 09:30 AM Reply Like
  • awakeinwa
    , contributor
    Comments (289) | Send Message
     
    never say never. ok, said, over.

     

    Tesla never claimed their cars are bulletproof. Their cars are just safe by design in every way they know how.

     

    I am a long. Nonetheless I still want to hear from the horse's mouth how this fire happened - establish cause and effect.

     

    After all, there is light armor covering the bottom of the car. And having driven Seattle's 167 quite often, it can be a windy road but it is certainly not a debris field by any measure.
    3 Oct 2013, 10:39 AM Reply Like
  • awakeinwa
    , contributor
    Comments (289) | Send Message
     
    guess it'll be a while until we know why, if ever.
    AP reports:
    "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."
    3 Oct 2013, 10:51 AM Reply Like
  • Retired2thDoc
    , contributor
    Comments (90) | Send Message
     
    Tesla long, here.
    Was always ready for this possibility, but live by the probability/possibility dichotomy. Always a possibility, hardly a probability of a fire, again thinking spontaneous only.
    All considered, still long.
    Easy to do when you're averaged in at $42.
    Probably buying.
    3 Oct 2013, 11:13 AM Reply Like
  • John Bingham
    , contributor
    Comments (801) | Send Message
     
    Agreed, awake,

     

    There are always events that cannot be planned for. If you could foresee everything there would never be accidents in the first place.

     

    I think the fact that the fire was contained away from the passenger section of the car, and the car itself warned the driver to leave the highway and exit the car before any real damage occurred should be a reason to congratulate Tesla on their excellent engineering, and not to condemn them.

     

    Teslas have driven many millions of miles in the last five years and this is the first time there has been a fire in any of their cars.

     

    That's a pretty good safety record!
    4 Oct 2013, 03:29 AM Reply Like
  • Joe Dirnfeld
    , contributor
    Comments (1128) | Send Message
     
    The Boeing 787 seems to catch fire every other day, Boeing stock is making new highs once they configured the battery in a similar way to tesla.
    3 Oct 2013, 08:14 AM Reply Like
  • westewart
    , contributor
    Comments (48) | Send Message
     
    boeing commercial planes make up only ~60% of total revenues and of that 787s are ~10% of deliveries. 737/777 sales & 'not as bad as we thought' sequestration are big drivers too. tsla is a one trick pony - a lot more to lose on a single battery fire.
    3 Oct 2013, 08:33 AM Reply Like
  • Yesterdays_news
    , contributor
    Comments (1127) | Send Message
     
    Tesla now says car fire began in battery after crash.

     

    http://bit.ly/1btpvlU
    http://bit.ly/1btptKK
    3 Oct 2013, 09:08 AM Reply Like
  • Raymond Wiacek
    , contributor
    Comments (49) | Send Message
     
    "Tesla Model S car on fire was confirmed by Tesla that the fire was caused of a head on collision with a metal object and not internal or mechanical."

     

    Overreaction...
    3 Oct 2013, 08:42 AM Reply Like
  • alext1379
    , contributor
    Comments (706) | Send Message
     
    But just the reason needed for those who missed out to get in at a huge discount. Eat the poor and stupid is the mantra.
    3 Oct 2013, 08:54 AM Reply Like
  • Yesterdays_news
    , contributor
    Comments (1127) | Send Message
     
    "the fire was caused of a head on collision with a metal object"

     

    So what started the fire??? Hundreds of ICE cars have daily front end collisions and don't turn into a torch. Pretty much EVERYTHING is a metal object on the road.
    3 Oct 2013, 08:55 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    HI Raymond,

     

    That's exactly the point I was making. If there was a fire, there would be an over-reaction. Q.E.D.

     

    The bigger point is that the TESLA-philes were insistant that no fire could ever happen.

     

    Just shows that when someone is 100% insistent that something can't happen, they better be right, or they will look foolish.

     

    So, I say to all the TESLA-philes.... How about being less ideological and mix in a little common sense?
    3 Oct 2013, 08:57 AM Reply Like
  • tech01x
    , contributor
    Comments (623) | Send Message
     
    Reel Ken, beat the straw man much?
    3 Oct 2013, 09:19 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi tech,

     

    Not really, what is it your beating? I have my guess.
    3 Oct 2013, 09:35 AM Reply Like
  • SteveSzabo
    , contributor
    Comments (29) | Send Message
     
    Please notice in the video the guy says its a brand new car when he couldn't see the car through the flames. Is this a set - up by?
    3 Oct 2013, 09:34 AM Reply Like
  • Retired2thDoc
    , contributor
    Comments (90) | Send Message
     
    Have had my suspicions also, This is a high stakes game the big boys are playing.
    3 Oct 2013, 11:18 AM Reply Like
  • Clayton Rulli
    , contributor
    Comments (2466) | Send Message
     
    Perhaps a bear holding huge put positions rented a (TSLA) from (HTZ) and "accidentally" set it on fire? HAHA
    3 Oct 2013, 09:34 AM Reply Like
  • juan213
    , contributor
    Comments (6) | Send Message
     
    I also don't recall this car as being touted as INDESTRUCTIBLE!! LOL . How would shares fall for other vehicles every time they catch fire?!?! LOL, gotta love the shorts and their talll tales...
    3 Oct 2013, 09:35 AM Reply Like
  • vandeley
    , contributor
    Comments (108) | Send Message
     
    Other auto companies don't trade at 15x sales and 35x book value
    3 Oct 2013, 10:07 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi Juan,

     

    Maybe you could benefit from reading a few more articles.

     

    The "philes" touted it as the 1) "safest car ever tested" and 2) "no battery fire in Crash Tests".

     

    The first statement was always a blatant mis-characterization, and so now, the second follows suit.
    3 Oct 2013, 09:38 AM Reply Like
  • Fracjob
    , contributor
    Comments (1138) | Send Message
     
    So much for the "safest" car on the road propaganda!
    3 Oct 2013, 09:55 AM Reply Like
  • awakeinwa
    , contributor
    Comments (289) | Send Message
     
    safest != indestructible.

     

    people's need for black and white certitude never cease to amaze me.

     

    guess it's how some people's brains are wired.
    3 Oct 2013, 10:40 AM Reply Like
  • AnsgarSJ
    , contributor
    Comment (1) | Send Message
     
    "Black swans do exist!"
    3 Oct 2013, 10:01 AM Reply Like
  • awakeinwa
    , contributor
    Comments (289) | Send Message
     
    Incidentally, the car was driving safely on the road 83 miles before the incident occurred. There was no other vehicle in sight on the video
    3 Oct 2013, 10:45 AM Reply Like
  • Cassina Tarsia
    , contributor
    Comments (641) | Send Message
     
    What would happen if a "metal object" hit the gas tank of an ICE car? I rest my case ...
    3 Oct 2013, 10:53 AM Reply Like
  • Fel-D-1
    , contributor
    Comments (56) | Send Message
     
    It would probably bounce off. Don't you think after 100+ years of ICE motors that's happened a time or two?
    3 Oct 2013, 11:29 AM Reply Like
  • rhyse12
    , contributor
    Comments (168) | Send Message
     
    I would rest it too. You have no case...

     

    Now, if the tank was punctured, and the leaking fuel VAPOR subjected to open flame, then you would have a fire...

     

    The car caught fire, who cares. If the tesla was parked on the side of the road, and burst into flames for no reason, it would be a concern..
    If it was plugged in at a charger at a Starbucks, and burst into flames, it would be a story.

     

    I think this stock at current prices is a fools errand, but this is a non-story. Something happened, involving a hot stock, so it gets headlines.
    3 Oct 2013, 10:59 PM Reply Like
  • mobyss
    , contributor
    Comments (1829) | Send Message
     
    You have to consider this from a "death-history" standpoint.

     

    Sure, many thousands of people have died in gas-engine car fires over the decades, but there are probably a hundred-trillion miles of data on gas cars, and it is well known that the incidence of gas fires is extremely low.

     

    Gasoline also doesn't burn in liquid form, so ONLY if there is a gas leak and ONLY if there is some kind of spark will gasoline burn. Even then, it's usually a slow enough burn to allow people to get away. The "exploding car" stuff from the movies is BS.

     

    Now, with battery cars, nobody knows. The exotic metals used in these batteries can be flamable themselves, and they burn at a very high temperature. Is there enough data to show that when a battery catches fire you have a good chance of living? What Tesla should probably do is install some kind of automatic fire suppression system in the car. It might add $1000 or so to the price, but they are selling to a "time and lifespan is money" crowd, not a "save a buck" crowd.

     

    We'll see how this goes, but undoubtedly a stock that has risen 430% in six months is susceptible to drop on any negative news.
    3 Oct 2013, 12:00 PM Reply Like
  • DeliciousWolf
    , contributor
    Comments (71) | Send Message
     
    I've seen plenty of stocks tank for various reasons including fires, recalls, scandal, fraud, etc. From my observations they fall into two broad categories of problem: 1) core problem 2) product/service problem.Scandal and accounting fraud fall into the first category (Worldcom, Doral): something is "rotten to the core", it's unexpected, serious and the share prices fall permanently. Doral's revelation of revenue fraud permanently collapsed the share price.

     

    A product (or service) problem like this falls into the latter category: the stock tanks, the company investigates and corrects, and the stock price recovers (Boeing, Apple). A product or service problem is temporary, even the Dreamliner fire problems, because it isn't capable of destroying the entire company.

     

    This model S fire falls squarely into the latter category, especially when we consider that there was a collision and no one died. Combine that with a same-day downgrade to neutral and we have a very temporary sell-off.

     

    I note the healthy discussion here debating this fire shows this not to be a company destroying event. Staying long TSLA.
    3 Oct 2013, 12:03 PM Reply Like
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