UPDATE 5-Tesla reports third fire involving Model S electric car

Thu Nov 7, 2013 2:55pm EST

(Adds comments about gasoline and battery powered cars, updates stock activity)

By Ben Klayman and Bernie Woodall

DETROIT Nov 7 (Reuters) - Tesla Motors Inc reported the third fire in its Model S luxury electric car in six weeks, this time after a highway accident in Tennessee, sending shares down 9 percent on Thursday.

The Tennessee Highway Patrol said the 2013 model sedan ran over a tow hitch that hit the undercarriage of the vehicle, causing an electrical fire on Interstate 24 on Wednesday. A highway patrol dispatcher called the damage to the car "extensive."

The Model S undercarriage has armor plating that protects a battery pack of lithium-ion cells. Tesla said it did not yet know whether the fire involved the car's battery.

The first Model S fire occurred on Oct. 1 near Seattle, when the car collided with a large piece of metal debris in the road that punched a hole through the protective armor plating.

After the first fire, officials at the National Highway Traffic Safety Administration said they found no evidence to indicate a vehicle defect.

The second fire took place later in the month in Merida, Mexico, when, according to reports, a car drove through a roundabout, crashed through a concrete wall and hit a tree.

The Tesla Motors Club website contains pictures of the newest fire, and a company spokeswoman confirmed the accident, which occurred in Smyrna, Tennessee, where Nissan Motor Co makes the Leaf electric car.

While none of the drivers in any of the Tesla accidents were injured, the glaring headlines about fires were unwelcome for a company whose stock soared sixfold in the first nine months of the year. Since the first fire, Tesla's shares have lost more than 27 percent, and this week's declines are the worst one-week drop since May 2012.

"For a company with a stock price based as much or more on image than financials, those recurring headlines are highly damaging," Kelley Blue Book senior analyst Karl Brauer said.

Morgan Stanley analyst Adam Jonas said the risk of a formal investigation by U.S. safety regulators "could raise near-term concerns to a higher level in terms of cost, image and production disruption."

Tesla said it has been in touch with the driver of the Wednesday incident, who was not injured. The vehicle was driven by Juris Shibayama, 38, of Murfreesboro, Tennessee, according to the highway patrol. Shibayama could not be reached for comment.

"Our team is on its way to Tennessee to learn more about what happened in the accident," Tesla spokeswoman Elizabeth Jarvis-Shean said in a statement. "We will provide more information when we're able to do so."

Tesla's battery pack is made up of small lithium-ion battery cells that are also used in laptop computers, an approach not used by other automakers. The battery pack stretches across the base of the vehicle. In comparison, General Motors Co uses large-format battery cells in a T-shape in the center of the Chevrolet Volt plug-in hybrid car.

Other automakers have dealt with battery fires in electrified vehicles, including GM's Volt and Mitsubishi Motors Corp's i-MiEV.

The highway patrol report did not say how fast the Tesla Model S was traveling in Tennessee, but the driver was able to pull off the roadway and get out of the car.

A woman who answered the phone at the lot where the car was towed said Tesla officials had arrived Thursday morning and were inspecting the vehicle.

On Tuesday, Tesla forecast a weaker-than-expected fourth-quarter profit and posted third-quarter Model S deliveries that disappointed some analysts.

Neither driver was injured in the earlier accidents, and in all three cases the company said the owners have asked for replacement cars.

After the first fire, Tesla Chief Executive Elon Musk defended the safety performance of electric cars.

"For consumers concerned about fire risk, there should be absolutely zero doubt that it is safer to power a car with a battery" than a conventional gas-powered vehicle, he said on a blog post.

Company executives called that first fire a "highly uncommon occurrence," likely caused by a curved metal object falling off a semi-trailer and striking up into the underside of the car in a "pole-vault effect."

At the time, Musk did not say if Tesla would make any changes to the Model S battery design as a result of the first accident. Jarvis-Shean had no immediate comment when asked if such changes were being considered.

Gasoline engines are dangerous, but Americans have learned to live with them over the years, said Tom Gage, the former CEO of AC Propulsion, which developed the drive train for Tesla's first model, the Roadster.

"Obviously, gasoline can be lit more easily and can burn with more ferocity than a battery can, but a gas tank in a car now benefits from 120 years of fairly intensive development and government regulation regarding how you make it safe," he said.

Gage, now CEO of EV Grid, a company working to integrate EV batteries with the power grid system, said Tesla could consider raising the battery higher in the car or further reinforcing it.

Tesla's shares fell as low as $137.62 on Nasdaq, and were off $10.17, or 6.7 percent at $140.99 in afternoon trading. (Additional reporting by Deepa Seetharaman; Editing by Gerald E. McCormick, Maureen Bavdek and Jim Marshall)

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Comments (5)
GVOLL wrote:
Is Tesla a ump and dump stock??

Nov 08, 2013 10:42am EST  --  Report as abuse
GFEMG wrote:
Current battery technology is not ready for prime time for use as the exclusive power source in automobiles. Even the most up to date latest battery technology is not cost-effective, nor is it practical for use as the sole main power source in an automobile. The cost of the very large battery packs needed for the 100% electric vehicles and for the large battery packs used in full hybrid vehicles is still way to HIGH. The current battery technology cannot provide sufficient driving range, and the recharging time is still Way Too Long. This makes the 100% all-electric vehicles like the Tesla and the Leaf impractical for use as the only vehicle in the family, while also making it financially impossible to justify the large added cost of a full hybrid drive system.

Even worse – when the batteries are mounted in a location within the vehicle where their casings can easily be breached, causing the battery pack to erupt in fire, as in case of the Tesla – the vehicle becomes downright dangerous for the driver and occupants. On the one hand, mounting the battery pack as low as possible to keep the center of gravity down low does improve handling. But on the other hand one has to wonder what the designers of the Tesla were thinking when they came up with the battery design – a large thin, flat rectangle mounted at the very bottom of the vehicle, where it essentially comprises virtually the entire underside of the vehicle – making it extremely vulnerable to puncture from road debris.

Without question this design was seriously flawed from its very inception, and I knew it would only be a matter of time before this seriously flawed design would manifest itself in the Tesla vehicle fires that are occurring from their bottom mounted battery packs being punctured by road debris. The fix for this will essentially require a complete re-design of the vehicle and it would not surprise me at all – if all of the current Teslas on the road were deemed unsafe by the government and banned from the roads altogether. Anyone owning Tesla stock needs to seriously reconsider the valuation of their investment, given these circumstances.

Looking at all of the current 100% all-electric vehicles out there, when you consider their limited driving range, long recharge times and lack of a sufficient recharging infrastructure nationwide – these vehicles are for the foreseeable future only very limited use vehicles that cannot fulfill the overall driving needs and demands of most motorists. Battery technology is 5 to 10 years away from where it really needs to be in its development and evolution, to where it would become a practical sole source of power for use in electric vehicles and cost-effective for use in full hybrid vehicles. The current most practical long range electric drive system is the gas/electric system used in the Chevy Volt. Expanding this concept to diesel/electric would make it even more efficient. This is the technology where the auto manufactures should be putting their main emphasis at this time (along with the GM eAssist system) for producing more efficient high mileage vehicles. With a significant increase in the production of vehicles utilizing the Volt drive system technology the cost should come down, making them much more affordable.

At this time the only other electric drive technology that both makes sense and is cost effective is the eAssist “light hybrid” system from GM. I recently purchased a brand new 2012 model Buick Regal with eAssist and I absolutely love it. It is a Luxury vehicle that I was able to get an incredible deal on – and in the hands of a driver with good efficient driving skills it delivers really great mileage. in fact – I am exceeding GM’s numbers of 25 mpg city and 36 mpg highway (compare these numbers with the 19 mpg city and 25 mpg highway for the non-eAssist version of the Buick Regal). I am getting 26 mpg city and 37 mpg highway, with an overall average of better than 31 mpg – Very Impressive!

The GM eAssist system, with is smaller and much lower cost motor and battery components is currently the most cost-effective electric drive assist system on the road today. It captures energy used to slow and stop a vehicle (energy that is otherwise totally and completely lost and wasted away in the form of the heat buildup in the vehicle’s brakes) and re-cycles this energy back into the drive system to assist the gas engine and in the process – it reduces the amount of gasoline needed by the engine, thus significantly increasing the miles per gallon – and it does this without the high additional cost of a full hybrid drive system. The eAssist system will also greatly extend the life of the brake system components, making it possible for the original brakes to easily deliver over 100,000 miles of service, saving you even more money on brake system repairs.

If you are looking for the best value and performance in electric drive technology for increasing your fuel mileage – test drive a Chevy or Buick with the eAssist electric drive assist system – you will be very impressed at how Smooth the ride is! Plus – you’ll get an Incredibly QUIET ride, great styling and luxurious interiors – all of which you will not find in the electric drive assist vehicles from Toyota, Honda and Nissan – and – you’ll save a Ton of Money on gasoline and brake system repairs as you drive around in a Stylish, Luxurious and Very Quiet car.

Nov 09, 2013 8:53pm EST  --  Report as abuse
GFEMG wrote:
The safety of 100% electric powered cars becomes questionable when their large batteries are mounted in a location within the vehicle where their casings can easily be breached, causing the battery pack to erupt in fire, as in case of the Tesla. On the one hand, mounting the battery pack as low as possible to keep the center of gravity down low does improve handling. But on the other hand one has to wonder what the designers of the Tesla were thinking when they came up with the battery design – a large thin, flat rectangle mounted at the very bottom of the vehicle, where it essentially comprises virtually the entire underside of the vehicle – making it extremely vulnerable to puncture from road debris.

Without question this design was seriously flawed from its very inception, and I knew it would only be a matter of time before this seriously flawed design would manifest itself in the Tesla vehicle fires that are occurring from their bottom mounted battery packs being punctured by road debris. The fix for this will essentially require a complete re-design of the vehicle and it would not surprise me at all – if all of the current Teslas on the road were ultimately deemed unsafe by the government and banned from the roads altogether. Anyone owning Tesla stock needs to seriously reconsider the valuation of their investment, given these circumstances.

Nov 09, 2013 9:09pm EST  --  Report as abuse
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