This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Tesla Shares Drop on Report of Second Model S Fire

Stocks in this article: TSLA

Updated from 1:17 p.m. EST to provide company comments in the third paragraph.

NEW YORK ( TheStreet) -- Shares of Tesla Motors (TSLA - Get Report) dropped 3% to $164.55 on Monday, following footage of another Model S fire, this time in Mexico.

The crash reportedly happened Oct. 18 in Merida, a city in the northern Yucatan Peninsula of Mexico. As with the first Model S crash in Washington state, the fire appears to be localized in the front part of the car.

When asked for comment, Tesla was pleased the driver was safe, given the nature of the accident. "We were able to contact the driver quickly and are pleased that he is safe," a Tesla spokeswoman said in an email to TheStreet. This was a significant accident where the car was traveling at such a high speed that it smashed through a concrete wall and then hit a large tree, yet the driver walked away from the car with no permanent injury. He is appreciative of the safety and performance of the car and has asked if we can expedite delivery of his next Model S."

Judging by the video, it appears that the crash of the car was exceptionally severe, and a fire may have also happened to an internal combustion engine.

Fire and safety concerns have been an issue for Tesla, and its high-flying stock, since reports of the first fire were unearthed last month. The safety concerns were in part cause for a downgrade from Merrill Lynch last week. Analyst John Lovallo II questioned Tesla's support from institutional investors for factors such as "the recent Model S battery fire and potential NHTSA probe, and speculation of a slowdown in the company's European expansion," Lovallo wrote in a note.

The first fire caused CEO Elon Musk and the company to issue a post about the safety of the car on the company's official blog, as it relates to a gasoline-powered car.

"Had a conventional gasoline car encountered the same object on the highway, the result could have been far worse," Musk wrote in the post. "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. In contrast, the combustion energy of our battery pack is only about 10% of the energy contained in a gasoline tank and is divided into 16 modules with firewalls in between. As a consequence, the effective combustion potential is only about 1% that of the fuel in a comparable gasoline sedan."

Since the time of the crash, the National Highway Traffic Safety Administration has decided that it won't probe the first Model S fire from earlier this month.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs