Tesla: No Reason to Fear Fires, but We'll Take Action Anyway

It's all really been kind of silly. Negative headlines have swarmed the interwebs pointing to the "danger" of Tesla Motors (NASDAQ: TSLA  ) Model S battery fires. But a closer look at the numbers reveals very little merit to these concerns. And now the electric-vehicle manufacturer is stepping up to the plate in an aggressive public relations attempt to calm the storm.

Tesla CEO Elon Musk demonstrates battery swap technology for the first time. Source: Screenshot taken from Tesla video.

The passionate CEO who won't back down
If you haven't yet become familiar with Tesla CEO Elon Musk and his enthusiasm for his company's mission, here's your chance. In a company blog post, the CEO spoke up on Monday night in passionate defense of the company's vehicle.

Sure, new technologies should be held to a higher standard, Musk acknowledged. "However, there should also be some reasonable limit to how high such a standard should be, and we believe that this has been vastly exceeded in recent media coverage." Not holding back, Musk laid out the facts:

How Does the Tesla Model S Fire Risk Compare to Gasoline Cars?

Since the Model S went into production last year, there have been more than a quarter million gasoline car fires in the United States alone, resulting in over 400 deaths and approximately 1,200 serious injuries (extrapolating 2012 NFPA data). However, the three Model S fires, which only occurred after very high-speed collisions and caused no serious injuries or deaths, received more national headlines than all 250,000+ gasoline fires combined. 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.

To address what Musk calls the "onslaught of popular and financial media seeking to make a sensation out of something that a simple Google search would reveal to be false," Tesla has organized an aggressive plan to douse these fiery headlines.

First, Tesla immediately rolled out a software update that will give the car higher ground clearance at highway speeds. This will help the company address the two fires that resulted from the Model S driving over debris on the highway. Even more, the company plans to deliver a software update in January that will "give the driver direct control of the air suspension ride height transitions."

Model S. Source: Tesla's official Facebook page.

Second, Tesla has asked the National Highway Traffic Safety Administration to open an investigation of the fires.The request is not out of worry, Musk stated, but to combat "a false perception about the safety of electric cars."

Finally, Tesla has amended its warranty policy to cover all Model S fires except when an owner "actively tries to destroy the car." Musk said the adjustment to the warranty policy was made to "reinforce how strongly we feel about the low risk of fire in our cars."

This isn't the first time Musk has spoken up strongly in defense of the Model S. After the first fire, Musk's blog post on the matter even contained a hint of sarcasm: "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."

In the company's response to the third fire, Tesla didn't even bother saying a word. Instead, it let the driver of the vehicle speak up on Tesla's behalf. In fact, all three drivers maintained enthusiasm for the Model S after their accidents.

The right move
Tesla was in dire need of some aggressive and smart PR. Not only have negative headlines about the fires been splashed around the web, but the massive sell-off of Tesla stock is also sparking negative coverage. In the last month the stock has fallen by about 30%. To be fair, the sell-off can't be put into perspective until investors understand the stock surged more than 500% in the preceding 12 months.

While shortsighted investors look to these headlines and Musk's response as short-term drivers of the stock price, the important takeaway for Foolish investors is that Tesla's CEO is making a smart move by trying to get the concern out of the way early on. If this is a legitimate issue, it should be addressed now -- while the technology and design elements are still young -- not when Tesla brings its lower-cost, third-generation vehicle to market.

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Read/Post Comments (12) | Recommend This Article (2)

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 November 23, 2013, at 6:17 PM, smithy007 wrote:

    You should know that NHTSA’s Administrator David Strickland, flatly denied that Musk made such a request. "But NHTSA Administrator David Strickland told a House panel Tuesday that Tesla didn’t request an investigation and that the agency had made an independent decision to open an investigation into 13,100 Model S vehicles after two battery fires were reported since early October in the United States."

    From The Detroit News: http://www.detroitnews.com/article/20131119/AUTO01/311190095...

  • Report this Comment On November 23, 2013, at 7:42 PM, highgrowthcarson wrote:

    The only fire that matters is the fire sale in Tesla stock. Bargain basement prices for the company with possibly the best long-term growth story of any existing company. The potential to dominate a two trillion dollar industry. The great CEO. The lead in tech. The beauty and sophistication of their first mass-production car. The very real possibility that EV's due, not to their 'greeness' but to their utter simplicity, will replace ICE's in the not too far distant future. These are the things that matter. The 'miss' in earnings, the harping about earnings quality, the fires and the silliness over battery 'shortages' don't make any difference in the long-term story -- they only have forced down the price of the stock to the point of absurdity. Get in now while the sale lasts.

  • Report this Comment On November 23, 2013, at 8:09 PM, Decoy0527 wrote:

    So about 5 days after the NHTSB notified Tesla that they were coming, a financial writer writes an article that states Tesla initiated the investigation. Tesla supporters sometimes come across as a bit silly. Reminds me when Elon said Tesla was cash flow positive, but did not reveal until later that it was for a one week (meaningless) period. Be wary of CEO's that exaggerate.

  • Report this Comment On November 23, 2013, at 10:25 PM, rotorhead1871 wrote:

    get rid of the battery...convert to fuel cell and you will have a car for the future....batteries are a TOTAL liability....very expensive to manufacture, very expensive to replace and render...take forever to charge...

  • Report this Comment On November 23, 2013, at 10:33 PM, ashaskevich wrote:

    Look at the stats. If you have any brains and see that 3 fires for 20,000 vehicles vs 250,000 fires for 193,979,654 vehicles ( 2009 number in wikipedia).

    Tesla is far safer and over time, who in his right mind will drive a gasoline powered car.

  • Report this Comment On November 24, 2013, at 1:45 AM, Ustauber wrote:

    Thx TSLA

  • Report this Comment On November 24, 2013, at 1:53 AM, dannystrong wrote:

    And the Fool's love affair with Elon Musk rolls on. This is not, as Tesla partisans content, a simple matter of Teslas or gasoline (for instance, "Ashaskevich": "Tesla is far safer… who in his right mind will drive a gasoline powered car.")

    Mr. Musk would most certainly like it to be that way -- its all that's keeping his stock price above 0 -- but it is simply not so. To declare Teslas the wave of the future is to tie your future to a technology over 100 years old. A technology that is not, and can never be, efficient. A technology that is, according to MIT(report, November 21, this year), quite the reverse of Mr. Musk's 'unbiased' risk analysis -- Teslas are more likely, not less likely to catch fire in collisions. Five times more likely, specifically.

    Isn't a bit disingenuous for someone who spent vast monies and efforts to be publicized to claim he is getting too much attention?

  • Report this Comment On November 24, 2013, at 6:53 AM, bcassidyt wrote:

    Whew, dannystrong. Don't buy any stock!

  • Report this Comment On November 24, 2013, at 9:14 AM, duuude1 wrote:

    Go Elon!

    Will be buying shares in your company(ies), and will be buying your gen iii sedan.

    Every generation, we see the equivalents of the buggy makers and buggy-whip makers who railed against the noisy, smoky, unsafe automobiles and their young whippersnapper enthusiasts scaring all the horses and churchgoers...

    There will always be the Puritanical technology naysayers. Today, do we know the names of any of those naysayers who denied cars (or airplanes, computers, the internet, the iPhone, Netflix, Tesla...) - not really, they were buried in unmarked paupers graves.

    Duuude1

  • Report this Comment On November 24, 2013, at 2:34 PM, TMFDanielSparks wrote:

    @smithy007,

    Thanks for that! Definitely wasn't aware of that piece of information when this article was written. I pulled straight from Tesla's official blog for my source. I think this new information from the NHTSA could make a good source for another article I'll have to write.

    Though it seems very odd that Tesla would make such a claim, It's not my place to say Musk is lying -- at least not until he has a chance to speak up in his defense.

  • Report this Comment On November 24, 2013, at 9:07 PM, hunter3203 wrote:

    Does anybody remember Elon Musk's original response following the first Model S fire? In it he compared the fire risk between the Model S and the general auto population. 1 fire in 100 Mil miles driven for the Model S versus 1 fire in 20 Mil miles for the general population, five times better. Now that there have been 3 fires the Model S's fire rate has dropped to 1 fire in 33 Mil miles. Still better than the general population but far less than the 5 times better that Elon Musk continues to claim.

  • Report this Comment On November 25, 2013, at 7:00 AM, MM704 wrote:

    Though it must be stated that these incidences are rare, it is known that lithium-ion batteries have a certain potential to catch fire.

    Anyway, I remember Elon Musk laughing when asked for his thoughts on BMW's i3.

    BMW is investigating new powertrain solutions for its next-generation zero-emission vehicles, including fuel cell-powered electric motors. And here they team up with Toyota to develop this technology. Plan is to introduce a new fuel cell vehicle around 2020.

    A fuel cell-powered electric car will offer short refueling times and enable long distance travel with zero emissions. A clear advantage versus a Tesla.

    And as BMWs CEO Reithofer says: "BMW is keen to remain in the lead in this area." So is Toyota, too!

    Oh, I forgot, there are still Mercedes, Ford, GM, Audi, Volkswagen and...

    So Elon, who's laughing last?

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