Model S fires turn up heat on Tesla, but the streets are paved with electric gold

Tesla Fires NHTSA Inquiry

Tesla’s not out of the woods just yet, as the National Highway Traffic Safety Administration (NHTSA) has asked for additional information surrounding the recent Model S fires that have been widely covered by the media. But it’s likely to be just a minor blip on the road to recovery.

Reuters reports that the NHTSA has asked for consumer complaints, property damage claims and other details due to the two fires that happened on domestic soil since in October. Tesla has until January 14th to send over the additional information.

There was a subsequent fire that happened in Mexico as well.

Tesla has had a rough go of it in the past few months, with the stock plunging all the way from $194.50 at the end of September due in part to weak fourth-quarter guidance and concerns over the safety of the Model S. CEO Elon Musk has said the Model S is one of, if not the safest car on the road. “It is literally impossible for another car to have a better safety track record, as it would have to possess mystical powers of healing,” Musk wrote in a blog post talking about the initial probe from the NHTSA.

Tesla is likely to come out of the probe with a clean bill of health from the NHTSA. Germany’s own version of the NHTSA, the German Federal Motor Transport Authority, Kraftfahrt-Bundesamt (KBA), recently cleared Tesla of any wrong doing. Given how stringent Germany is with its safety rules and regulations, it’s a good bet that Tesla is cleared of any wrongdoing in the U.S.

“According to the documents, no manufacturer-related defects [herstellerseitiger Mangel] could be found. Therefore, no further measures under the German Product Safety Act [Produktsicherheitsgesetz (ProdSG)] are deemed necessary,” the KBA said in a letter.

The fires have received an enormous amount of media coverage due in part to Tesla’s high share price, Musk’s personality and the newness of electric vehicles. I would expect shares to rise into the eventual decision by the NHTSA as it removes uncertainty about the stock.

Morgan Stanley analyst Adam Jonas named Tesla the top auto stock to own in light of all the negative press surrounding the fires. “We believe negative news flow on Model S fires, while clearly disruptive to the stocks momentum, will not cause material damage to the business,” Jonas wrote in the note.

As far as the company is concerned, Tesla has done a good job of managing the negative press surrounding the fires.

Countless owners have gushed over owning the car and having driven one myself, I can tell you, it’s the best driving experience I’ve ever had. While the road to glory is not always paved with gold, Tesla’s electric road will look a lot clearer sooner rather than later. Even if there is a speed bump or two along the way.

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