DETROIT Oct 3 Tesla Motors Co's stock
price took another hit on Thursday and its sales were likely to
suffer following a battery fire in its flagship Model S sedan in
Washington state this week, analysts said.
Tesla's shares fell 6.4 in early trading, following a more
than 6 percent decline on Wednesday after images and a video of
the burning car were posted online. The accident and fire
occurred Tuesday morning just south of Seattle.
Tesla confirmed that the car caught fire after the driver
ran over a "large metallic object," causing extensive damage to
the vehicle's front end.
Analysts said the news and imagery of the burning car would
certainly be a public relations nightmare for the Silicon
Valley-based electric carmaker, led by billionaire Elon Musk.
"Tesla's a very controversial stock and this will give
fodder for the bears. They'll say this is going to slow down
sales," said R. W. Baird analyst Ben Kallo, who on Wednesday
downgraded the stock to "neutral" for valuation reasons.
Tesla officials said the battery's construction and the car
worked as designed to keep the fire under control and allow the
driver time to pull over and safely exit the vehicle.
"The fire was caused by the direct impact of a large
metallic object to one of the 16 modules within the Model S
battery pack," Tesla spokeswoman Elizabeth Jarvis-Shean said.
"Because each module within the battery pack is, by design,
isolated by fire barriers to limit any potential damage, the
fire in the battery pack was contained to a small section in the
front of the vehicle," she added.
The incident report filed by the Kent Fire Department in
Washington described how the firefighters put out the blaze, but
it reignited underneath the car and water seemed to just
intensify the flames. They then used a dry chemical extinguisher
to put out most of the fire in what was described as the battery
pack in the front end of the vehicle.
"(Firefighters) had to puncture multiple holes into the pack
to apply water to the burning material in the battery,"
according to the report.
The firefighters then used a high-lift jack to expose the
undercarriage of the car to get at the battery pack, and used a
circular saw to cut an access hole, according to the report.
Panasonic Corp, which supplies the batteries used
in the Model S, declined to comment.
The auto industry has been increasingly shifting toward
using lithium-ion batteries rather than the cheaper, but heavier
nickel-metal hydride battery still used widely by Toyota Motor
Corp in its top-selling Prius.
General Motors Co, the largest U.S. automaker, uses a
lithium-ion battery in its Chevrolet Volt plug-in hybrid, while
its smaller U.S. rival Ford Motor Co uses the technology
in its green cars, including the C-Max hybrid.
The technology is favored in the latest generation of such
cars because the batteries can be made lighter, smaller and in a
way that retains capacity longer. Lithium-ion batteries are
about half the weight of nickel-metal hydride batteries.
(Additional reporting by Yoko Kubota in Tokyo; Editing by