Barclays analyst Brian Johnson says Tesla Motors (TSLA -4.1%) could take a serious hit to sales if a federal safety investigation into the Model S lasts more than a few months.
The analyst cites Toyota’s sticky accelerator issue in 2010 and Audi's unintended acceleration flap as two recall incidents that led to a serious tail-off in demand. Though the examples are cherry-picked, each centered on negative publicity that didn't run out of gas very quickly.
Shares of TSLA are downgraded to Equal Weight from Overweight by Barclays due to the overhang and the price target is cut to $120.
The concept car has already drawn rave reviews for style, while it's an easy sell to environmentalists with only water vapor to be emitted from the tailpipe.
What to watch: Toyota needs to demonstrate it has plans to build a network of hydrogen charging stations in places such as Germany, Japan, and California before the energy source will be taken more seriously.
Tit for tat: Toyota execs will have the attention of the world's auto press right on the heels of another Tesla Motors (TSLA) Model S fire. It's likely they won't forget Musk called hydrogen fuel cells a waste of time in a speech last month.
Shares of Tesla Motors (TSLA) are lower in premarket action following the worst two-day drop in the company's trading history.
Most automobile industry analysts think the EV automaker will cruise past scrutiny over safety concerns with the Model S, although Kelley Blue Book analyst Karl Brauer notes multiple headlines with the words "Tesla" and "fire" could have a short-term impact on the brand.
A third fire of a Tesla Motors (TSLA -6.4%) Model S is reported to have been caused by the vehicle running over a tow hitch on the highway.
The automaker says it has sent a team to the Tennessee location to do a routine investigation.
No defect in the Model S has been found to be directly attributable to the first two fires which created a trading ripple.
Shares of TSLA are lower on the day with the news of the fire, but level-headed analysts think the larger issue on Tesla is valuation and production targets - not relatively routine car fires post-accident.