Another Model S Fire. Should Tesla Investors Worry?
Oct 28th 2013 8:38PM
Updated Oct 28th 2013 8:40PM
Yes, another fire.
When the first Model S caught fire, Tesla Motors' Elon Musk was able to quickly calm investors in a carefully worded blog post. But will Musk's voice be as reaffirming after a second fire in less than a month's time?
The second fire began after a Tesla Model S driver smashed through a concrete wall and into a tree last week, according to Tesla in a statement confirming the incident on Monday morning. Mexican newspaper Progreso Hoy posted this video of the incident.
As the video made rounds on Monday, Tesla's stock dropped 4%.
Tesla says the driver is safe and has asked Tesla to "expedite delivery of his next Model S."
The statistics are still in Tesla's favor
Is this just a coincidence that two Model S vehicles have caught fire recently? Or is there seriously a defect with the Model S that causes it to catch fire so easily?
Fortunately, the answer to this question is very easy. For now, Tesla's Model S still appears to be less likely to catch fire than a traditional vehicle.
As a Tesla blog post following the first fire pointed out, nationwide driving statistics suggest that there is one vehicle fire for every 20 million miles driven. Earlier this month, Musk said that the company's first fire marked one fire in more than 100 million miles driven for a Model S. With another fire, that statistic has changed to one fire in about every 50 million miles driven -- still a much better ratio than the national average.
Stats aside, Musk broke it down elementary style for Wall Street in the October 4 blog post: "For consumers concerned about fire risk, there should be absolutely zero doubt that it is safer to power a car with a battery than a large tank of highly flammable liquid."
No matter how rational that logic may sound, however, it hasn't stopped Mr. Market from shaving a few hundred million dollars off the company's market capitalization.
Should Tesla shareholders worry?
Not at this point. Though it's a development certainly worth keeping an eye on to see if fires persist, Tesla still has the upper hand on traditional vehicles when you look at the stats.
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The article Another Model S Fire. Should Tesla Investors Worry? originally appeared on Fool.com.Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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