Electric-car maker Tesla (NASDAQ:TSLA) said Tuesday morning that its late-2015 launched Model X SUV earned a 5-star crash rating in the National Highway Traffic Safety Administration's (NHTSA) tests. The SUV was the first SUV to be awarded a 5-star rating in every category and every sub-category, Tesla said.
The Model X's high safety rating puts the spotlight on both Tesla's relentless commitment to safety and the inherent superiority in the fundamental design of all-electric vehicles.
Safety is king at Tesla
It's not necessarily a surprise that Tesla's Model X received such high marks from NHTSA. From the Model X's initial launch in late 2015, Tesla has asserted the vehicle is expected to receive a 5-star rating across the board. But Tuesday's results are still reaffirming. Indeed, the stock is up more than 3% on Tuesday, at the time of this writing.
Tesla cited the Model X's all-electric architecture as a key reason for the vehicle's rating:
The rigid, fortified battery pack that powers Model X is mounted beneath the floor of the vehicle creating a center of gravity so low that Model X has the lowest rollover probability of any SUV on the road. No other SUV has ever come close to meeting and exceeding this rollover requirement.
The battery pack also helps with side collisions. Further, the placement of motors on Tesla's axels as opposed to being mounted in the front of the vehicle allows for a larger front crumple zone.
Model X's probability of injury was lower than all other vehicles, second only to Tesla's own , which also benefited from the fundamental benefits of an all-electric design. The probability of serious injury in a Model X during a serious crash is about 7%, NHTSA concluded.
Tesla's commitment to safety is apparent by not only its Model S's and Model X's crash ratings, but by the emphasis of safety in Tesla's driver-assist Autopilot system. Earlier this year, NHTSA said it was closing an investigation of a deadly crash that occurred when Autopilot was activated after concluding it didn't find any defects in the system. Going further, NHTSA concluded that the system is helping reduce crashes by about 40%.
Notably, NHTSA's investigation of Autopilot was done before Tesla released a significant update for its radar sensor and began beaming software updates to its newer vehicles with Enhanced Autopilot, a significantly improved version of Autopilot with much better hardware.
A timely announcement
The Model X's 5-star rating across the board in NHTSA's test comes at a great time for the electric-vehicle maker. Ahead of its Model 3 launch in the second half of the year, Tesla said it expected second-quarter vehicles sales to be between 12% lower to flat compared to its first-quarter vehicle sales. This suggests management is seeing signs that its Model S and Model X vehicle sales are peaking. Going further, in its most recent quarterly update, Tesla departed from its usual practice of commenting on order growth for its vehicles.
With Model X accounting for nearly half of Tesla's first-quarter deliveries, the SUV's unprecedented safety rating may help give vehicle sales a boost ahead of Model 3.
Going forward, investors should look to Tesla's expectations for Model 3's safety ratings. With Tesla expecting to begin the first deliveries of Model 3 next month, Tesla has said it expects the vehicle to similarly achieve a safety rating of five stars in every category. Will Tesla maintain this bold claim when the vehicle launches next month? Based on Tesla's unmistakable track record with safety so far, it probably will.