Why the Tesla Fire Was No Big Deal

The Tesla Model S has been hailed as a very safe -- and very fun to drive -- electric sedan. Last week's fire shouldn't dent its reputation for safety, a Fool analyst argues. Photo credit: Tesla Motors

Shares of Tesla Motors  (NASDAQ: TSLA  ) took a nosedive last week after a YouTube video showing a burning Tesla Model S was brought to investors' attention. The video, which showed a Model S engulfed in flames after hitting an object in the road, fed long-standing concerns about the safety of electric cars -- and led quite a few Tesla investors to consider abandoning the stock.

Not to worry, says Motley Fool contributor John Rosevear. In this video, he explains why the Model S fire was no big deal -- and why Tesla's response to the incident speaks well for the company's management.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 07, 2013, at 9:22 PM, Fiat500S wrote:

    LOL, the stoc price is what this car is about. Saw one in Miami, FL in South Beach on their Lincoln Road showroom. Beautiful car, but it's definitely not affordable for anyone that would really need a break from gasoline prices. End of the day, Wall Street will sweep this fire as no big deal, and why not, the car is doing better on Wall Street than it is for a majority of Americans on Main Street.

  • Report this Comment On October 07, 2013, at 10:34 PM, speculawyer wrote:

    Yeah, the Tesla is a very expensive car. But remember, we live in the age of the massive wealth gap such that there are a lot of people with a massive amount of money that can buy this as a toy.

    Fortunately, there are other EVs that us mortals can afford but it will be plug-in hyrbid or have less than 100 miles range.

  • Report this Comment On October 07, 2013, at 11:58 PM, luckyagain wrote:

    I saw a car fire and the fire department could not put it out. They just let it burn and watered down a nearby house to keep it from burning. The fire burned the pain off the garage door but luckily did not start the house on fire.

    It was a good old fashion gasoline burning car. Gasoline is one of the most concentrated forms of energy that most humans ever see. Everyone stood back from the car because no one was sure if the gas tank would explode or not.

    Car fires involving gasoline happens every day. So it was inevitable that a Tesla would burn some day. Investors reacted like investors usually do and drove the stock price down. The stock price of Tesla is too high based upon fundamentals but it has caught the fancy of stock pickers for now at least.

  • Report this Comment On October 08, 2013, at 2:14 AM, brandonchen wrote:

    So what would have to happen for you to think it's a big deal, if the car which burnt to ashes was no big deal? Especially when the company claimed it's supposed to be the safest car?

  • Report this Comment On October 08, 2013, at 2:54 AM, greenknight32 wrote:

    The thing is, the car didn't burn to ashes - the fire was confined, and the firemen were able to put it out. It really demonstrated how much safer they are than gasoline-engined cars.

  • Report this Comment On October 08, 2013, at 7:16 AM, cliffvettej wrote:

    The comments posted after this Tesla fire by supporters of this car was amongst the most ridiculous I have ever read. One poster and supporter of the Tesla posted this account: "One section of the front of the car caught on fire and it was contained to just one small area of the front (watch the video--what a lie). The Fire Department had to turn the car over on its side and punch a hole in the battery to extinguish the fire (which requires a special chemical and here is where it gets good). AFTER extinguishing the fire the Fire Department turned the car back over on its wheels and the driver got in it and drove it home. The fire didn't even melt the tires". I have never read a more absurd post in my life. This was actually posted. Just look at the film on You Tube if you haven't done so. There is no way this car went anywhere but the scrap heap. What is really scary about this episode is that it was started by the Tesla running over road debris. People will post anything to protect their ideology and their "green" agenda.

  • Report this Comment On October 08, 2013, at 9:30 AM, AcuraT wrote:

    The Tesla is an advanced car for this day and age. Overall, all this shows is a weakness in the design - that road debris can damage the lithon ion pack under the car and when that happens, bad things (e.g. fire) can occur. Tesla has done nothing but prove they are creative and so far - a pretty well run company. Considering they are a start up making money selling eco "credits" to other gas burning car manufacturing companies, they have money and time to redesign the undercarriage and fix this issue and move forward. They will have to offer cars at some point the general public can buy - they are not there yet. GM, Nissan, Toyota, Ford, and even Honda are all racing to beat Tesla to a price point and performance point that will beat all competitors. Who will win that race is anyone's guess. The only thing is, Tesla is betting everything on that they will do it first - that is the only risk this company faces. Wall Street must believe that they will succeed first (otherwise their valuation would not be so high). We will have to wait and see if it is right.

  • Report this Comment On October 08, 2013, at 9:42 AM, CluckChicken wrote:

    "What is really scary about this episode is that it was started by the Tesla running over road debris. People will post anything to protect their ideology and their "green" agenda."

    Yes they ran over a large metal object that pierced a battery. Running over a large metal object is not something that one should do in any car. I can clearly remember reading about a guy who ran over a tire iron which pierced the cabin and then his gut, he died from the injury.

    Oh and my commute home yesterday was delayed because a Dodge Darango was burning from the engine compartment. Now I will probably never know (and don't really care) what triggered the fire but something far less scary then running over a large metal object was most likely the cause. There are after all 150,000+ car fires a year in the US.

  • Report this Comment On October 08, 2013, at 10:25 AM, B7478i wrote:

    I don't understand why this became such a huge story. Did people really think a Tesla was indestructible? Come on, Gasoline, Hydrogen, or Electricity... you are still carrying a ton of potential energy in that metal and plastic vehicle moving down the highway. Nature seeks an equilibrium regardless of the fuel... a "tank" rupture is a tank rupture.

  • Report this Comment On October 08, 2013, at 11:10 AM, rand49er wrote:

    Let's face it, by the very fact that so many stories are being written to suggest that this fire WASN'T a big deal is proof that IT WAS a big deal.

  • Report this Comment On October 08, 2013, at 11:20 AM, wholesalecd wrote:

    it was only a big deal because it's the first time it's happened. Lot's more good came out of it than bad. It showed that it's safer in this situation because the fire is contained to a specific area without hurting the occupants and this give them time to escape. There was a warning in place for this and it worked flawlessly.

  • Report this Comment On October 08, 2013, at 12:38 PM, ryanalexanderson wrote:

    As a result of all this ruckus, I actually feel that owning a Tesla would be a very safe choice.

    Owning TSLA, however...

    (NB - not because of the fire, you understand...just good ol' fashioned nodebleed evaluations)

  • Report this Comment On October 08, 2013, at 2:19 PM, cswalker21 wrote:

    Because as we all know, a car powered by gasoline could never ever catch on fire. Herp, derp.

  • Report this Comment On October 08, 2013, at 2:34 PM, gjsuhr wrote:

    The battery of a Tesla Model S stores the same amount of energy as roughly 2 gallons of gasoline, so any resulting fire isn't going to be a huge deal, relative to a gasoline fire.

    That said, given the relatively low amount of energy stored by the battery, a Tesla Model S doesn't make financial sense unless gasoline gets a lot more expensive or the battery gets a lot cheaper. For now, the Tesla is just a car for the rich, and the rich are notoriously fickle. Unless they can bring the costs down to where the average person can drive one to and from an average job, I'd be skeptical about the stock.

  • Report this Comment On October 08, 2013, at 3:40 PM, flyingdals wrote:

    I had a car pick up a small piece of metal which punctured the transmission pan - but the car did not catch fire. Yes gasoline powered cars catch fire, but before we claim electrics are safe (yes I drive one) - what will the response be when the next one catches fire (and there will be a next one). What if it's during recharging - actualy saw what happened when a natural gas vehicle burned odwn the refueling station 20 years ago. What if the frequency of fires in electrics (determined by miles driven) is 10x, 100x, or 1,000x greater than gasoline powered cars? Are you still going to say it's safe. As few of these cars that are actually on the road - I would be concerned. Why doesn't the top line electric car in the world have an automatic fire supression system? It seems like Mr. Musk was complaining about the fire department making it worse. I say just add the fire supression system and call it good. Cars (by nature) are the deadliest weapon that man has ever made. I wouldn't necessarily call any of them safe.

  • Report this Comment On October 08, 2013, at 3:55 PM, Jason87467 wrote:

    It was not a big deal because it was Tesla. Had it been a Volt, it would have been a giant deal.

    How can anyone say it was not a big deal. First there are not many Tesla on the road and second the whole front end of the car burnt to crisp. Why in the world is the battery doing up front? This is like having the gasoline tank in the front.

    Those laptop batteries used by the thousand are prone to causing fires.......oh! I forgot those batteries are high tech like the rest of the car.

  • Report this Comment On October 08, 2013, at 5:05 PM, syrgrad91 wrote:

    The location of the fire in the Model S was ahead of the lithium-ion battery pack (it sits below the passenger compartment). The conventional 12-volt battery on the other hand was in closer proximity of the fire and may have been involved. The other thing to remember is that the model S uses conventional rubber tires. When those catch fire they burn black smoke, just like the kind shown in the YouTube video. I would not be surprised if the car's battery pack was unharmed by the accident and subsequent fire. Obviously, we'll have to see what the final report says, but I'm guessing, as John says in his commentary, that this was no big deal.

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