Tesla Model S Fire Prompts Stock Tumble, Musk Allays Fears

After a Tesla Model S electric sedan caught fire earlier this week, panic over the future of Tesla caused the company's share price to tumble more than six percent compared to its close on Monday night. As of writing, Tesla shares were valued at $180.98, down from $193.00 per share at close on Monday. Despite the concerns, however, Tesla CEO Elon Musk assures customers the Model S is safe and doesn't present an outsize fire risk.

The incident occurred Tuesday, October 1, when a Tesla Model S traveling on a highway in Washington struck a "large metal object." According to Tesla, the car's on-board system warned driver Robert Carlson to pull over as soon as possible. Carlson was able to exit the car safely, but dramatic video of the resultant car fire (embedded below) soon spread across the Internet.

In a blog post, Tesla CEO Musk explained that the Model S battery pack is divided into 16 sections that are each firewalled, so that a fire on one compartment won't cause a larger fire. In the incident in Washington, Carlson apparently drove over a large curved piece of metal that puncture the protective tray beneath the battery pack. Tesla says that puncturing the protective tray takes significant force and is an unusual event. Despite the dramatic video footage, only one of the battery pack's 16 sections caught fire, and Carlson was still able to bring the Tesla Model S safely to a halt.

"There are 150,000 car fires per year, according to the National Fire Protection Association," Musk wrote in a blog post at the Tesla website. "You are 5 times more likely to experience a fire in a conventional gasoline car than a Tesla."

While panic over whether the Tesla Model S was likely to catch fire certainly spurred the Tesla stock-price shock, it wasn't the only cause: On Wednesday morning, the day after the fire incident, wealth-management group Baird downgraded its rating of Tesla stock from "Neutral" to "Outperform," which may also have influenced investors.

There's a history of excessive panic over fires in electric cars. In 2011, NHTSA opened an investigation into whether the Chevrolet Volt was likely to catch fire, but concluded in early 2012 that it, "does not believe that Chevy Volts or other electric vehicles pose a greater risk of fire than gasoline-powered vehicles." And before Fisker went bankrupt, its Karma plug-in hybrid car was recalled after defective cooling fans led to some fires.

The Tesla Model S was our 2013 Automobile of the Year. An eye-witness video of the Tesla Model S fire is embedded below.

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You can engineer for all possibilities,  however first responders have to be properly trained to quickly and safely defuse a potentially dangerous situation.

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