Jefferies Analyst: Tesla Cars Safe, Customers Not Shaken

NEW YORK (AP) -- Tesla's electric cars are safe, despite a widely shared video online that showed a Model S in flames, a Jefferies analyst said Monday.

The video helped send shares of Tesla Motors down more than 5% last week, as investors worried about the safety of its electric cars. In a blog post Friday, Tesla CEO Elon Musk said that the battery in the vehicle from the video caught fire after it was apparently impaled by a metal object on the road. Tesla said the car properly contained the blaze and the driver was able to leave the highway in a Seattle suburb before flames overwhelmed the front of the vehicle.

After meetings with Tesla executives last week, and test driving Tesla's cars, Jefferies analyst Elaine Kwei said that the risk of a fire is "still far lower in a Tesla than for a conventional vehicle."

Kwei said in a note to clients that the video hasn't shaken Tesla customers that she spoke with. "Most continue to believe that the accident was a one-off event and that driving a battery-powered vehicle is still far safer than driving with a tank of flammable fuel," Kwei said.

She increased Telsa's stock price target to $210 from $160. She also increased her estimates for the number of cars it will deliver in the third quarter to 5,500 units, from 5,250 units.

Shares of Tesla rose $2.22 to $183.20 in afternoon trading Monday. The stock ended 2012 at $33.87, rose modestly through early May, and has shot up since then.

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