On Monday, news of another Model S fire made vicious rounds on the interwebs. The negative headlines apparently concerned investors, as Tesla Motors' (NASDAQ:TSLA) market capitalization fell by hundreds of millions of dollars. As the second fire in less than two months, should investors worry?
Highly flammable liquid versus battery
Based on comments from Tesla CEO Elon Musk in a company blog post about the first fire in early October, earlier this week I explained that Tesla's Model S has only seen two fires in 100 million miles driven, while traditional vehicles have one fire for every 20 million miles driven. The numbers make a strong case that the vehicle is at least as fireproof as traditional vehicles.
But several readers suggested in the comments that the comparison doesn't suggest the Model S is safer, since the Model S is a new car and the national statistic for traditional vehicles includes much older models. A new car, they explained, should have far less vehicle fire incidents, they argued. It's a solid point.
Is there a counter to this argument? Or are electric vehicles simply just as likely to catch fire as traditional vehicles? As it turns out, there's still plenty of evidence that suggests Tesla's fully electric vehicles are a better alternative for preventing fires than filling your car with a large tank of highly flammable liquid.
Here are several reasons.
First, in an Oct. 30 press release Musk has given us a new mileage number that lies closer to the date of the second fire: 130 million miles driven. So it's more accurate to say that Tesla has seen two fires in 130 million miles than it is to say two fires in 100 million miles. That brings the statistic to one fire in every 65 million miles, compared with traditional vehicles' one fire in every 20 million miles.
Second, consider this: Along with a gas tank comes the infrastructure, or gas stations that pump out flammable liquid. Of course, far more gas stations are needed per car than electric charging stations, since Tesla owners can conveniently charge at home and only need to charge at a charging station on an extended road trip -- the Model S boasts a fully electric range of 265 miles.
Gas station fires occur all the time. If you want to see for yourself, just go to Google and search: "gas station fire". After that, click News at the top. Voila! Consider some of the wording taken from October headlines: "Woman Burned in Fire," "Florida Man Threatens to Set Woman on Fire at Gas Station," "2 Dead As Fire Engulfs Gas Station Hit by Truck."
For those who believe there's less fire hazard in filling your car with flammable liquid, try to count the number of charging-station fires. Even more, try to count the times someone was injured at a charging station. Finally, try to count the fires at Tesla's Supercharging stations in particular.
Safety is Tesla's advantage
Unless fires continue to persist causing statistics to look less favorable for Tesla, investors shouldn't worry about two fires in 130 million miles driven. For now, safety is still Tesla's advantage. As the safest car ever tested by the National Highway Traffic Safety Administration (safer than all minivans and SUVs, too), Tesla isn't likely to be recalling any vehicles because of a few fires.
On the other hand, investors should still keep an eye on the development. Though fires aren't a cause for legitimate concern now, it could be a problem if fires persist and the statistics get worse.
That said, I'd prefer to have a battery over a gas tank if I found myself in a potentially flammable situation.
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 don't 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.