Shares of Tesla Motors (NASDAQ:TSLA) have had a rough couple of weeks. Since the company’s quarterly report on November 7 — which, although results fell exactly where the company said they would, fell short of some bullish projections — sent the stock into a nose dive. Ordinarily, these things will even out after a couple of days and stabilize to some degree, even for a volatile stock like Tesla.
However, three incidents of vehicle fires relating to Tesla’s Model S sedan were also working against the stock, which is now trading around $120, down from the lofty $170-$180 range that it lived in for some time after a massive year-to-date run-up. Two Model S drivers hit some road debris, which ultimately led to a battery pack fire that would eventually consume the front ends of the cars. The third incident, in Mexico, was the result of a high-speed accident. In each case, the drivers walked away unscathed.
Nonetheless, the three fires — which happened within a span of six weeks or so — were enough to pique the interest of a certain government organization affectionately named the National Highway Traffic Safety Administration. After holding off on a formal investigation, the agency decided — after the third incident — that it would launch a probe into the fires, and Tesla’s stock promptly took a tumble.
Instead of scrambling for excuses and apologies, Tesla CEO Elon Musk welcomed the news with open arms.
Further, Musk reports that he actually requested a formal investigation by the NHTSA (though the agency appears to have a differing report), as he is extremely confident in the safety of Tesla’s cars. Moreover, the company is already making improvements to minimize the chances of another fire occurring.
Via a software update, Tesla can actually adjust the suspension settings on the Model S so that the car rides higher at certain highway speeds, lifting the fairly low-riding EV just a bit higher in case large pieces of debris are run over. This will help protect the battery pack, which makes up a large part of the car’s underbelly. Tesla’s warranty will also be updated to include fire damage regardless of where the fault of the accident lies.
Moved to action, Musk wrote a rather lengthy but compelling blog post on Tesla’s website that tackled a fairly crucial question in the heart of all the drama: Why is it that when there are hundreds of thousands of fires in conventional cars (resulting in hundreds of deaths, he asserts) that Tesla — and its three fires with zero deaths — is the center of such aggressive media speculation?
“The media coverage of Model S fires vs. gasoline car fires is disproportionate by several orders of magnitude, despite the latter actually being far more deadly,” Musk wrote. “Reading the headlines, it is therefore easy to assume that the Tesla Model S and perhaps electric cars in general have a greater propensity to catch fire than gasoline cars when nothing could be further from the truth.”
For emphasis, Musk threw in some jabs at conventional gasoline cars — one of his fortes, we might add. “Since the Model S went into production mid last year, there have been over 400 deaths and 1,200 serious injuries in the United States alone due to gasoline car fires, compared to zero deaths and zero injuries due to Tesla fires anywhere in the world,” he said in his blog post.
Importantly, rather than managing any potential investigations in-house, Musk is willingly turning that task over to the NHTSA and thereby avoiding any accusations of bias, at least on Tesla’s part. “While we think it is highly unlikely, if something is discovered [in the NHTA probe] that would result in a material improvement in occupant fire safety, we will immediately apply that change to new cars and offer it as a free retrofit to all existing cars,” Musk said.
Finally, Musk — and Tesla itself — is counting on the investigation’s results to quell the argument that electric cars are inherently more dangerous than their internal combustion counterparts. “However, there is a larger issue at stake,” Musk wrote. “If a false perception about the safety of electric cars is allowed to linger, it will delay the advent of sustainable transport and increase the risk of global climate change, with potentially disastrous consequences worldwide. That cannot be allowed to happen.”