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Tesla Share Surge Hits Wall After Fires, Loss

Could Crashes Be Linked To Nature Of New Electric Car Buyers?

Electrifying Model S Performance Might Spook A Prius Driver.

The shine has gone off Tesla Motor’s shares as the company reported a loss in the third quarter, and news of a third fire in a Model S battery car hit the headlines.

But there is plenty of sheen to spare. Tesla shares started the year close to $30 and accelerated madly to $190, before plunging back to around $140 after the news about the loss and another fire, a level still so high, even CEO Elon Musk describes as being divorced from reality.

In the third quarter, Tesla reported a net loss of $38 million. Sales totalled $431 million. Tesla delivered about 5,500 cars in the quarter, compared with expectations of 5,000, and will deliver another 6,000 in the current quarter for a total of 21,500 for the year.

Not many worries there. After all, the Tesla project is still in its infancy, and its plans to sell 60,000 cars in 2015, snowballing to over 530,000 by 2027, are still intact. News that the third Tesla had burst into flames since October 1 was also received with equanimity, as supporters used statistics to point out that this was not out of line with the normal rate of fires in cars.

According to Morgan Stanley, the fires are not a cause for concern because they are accident related. If they’d burst into flames spontaneously, that might worry investors. Government regulators might still get agitated though.

“A formal investigation (by the National Highway Traffic Safety Administration Authority NHTSA) or a recall, if initiated, could raise near-term concerns to a higher level in terms of cost, image and production disruption to Tesla,” said Morgan Stanley analyst Adam Jonas.

Balsa wood bikes
Jonas wondered if the rate of accidents in new Teslas could be linked to the fact that the Model S performance is alien to the habitual form of transport its buyers are used to.

“Are these relatively affordable Ferraris (being) driven by consumers who’s prior car was a Toyota Prius, a minivan or a balsa-wood bicycle,” Jonas said.

 Tesla, which has been on the receiving end of almost unanimous praise, has had to get used to handling bad news at last. The latest negative publicity came when Hollywood star George Clooney, in a UTube video, sounded off about how he was stuck on the side of the road by an old Tesla roadster.

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