Crash caused fire in Model S in Washington State, Tesla claims

Article by Anita Panait, on October 3, 2013

An online picture of a Tesla Model S on fire has caused shares of Tesla Motors Inc. to drop by as much as 9.1 percent.  The Jalopnik Web site published the picture, which was taken in the Washington State. The Web site had earlier said it couldn't provide a reason for the fiery incident. Tesla, however, said that the Tuesday fire was caused by a crash.

Tesla said in an e-mailed statement to Bloomberg that the Model S "collided with a large metallic object in the middle of the road, causing significant damage to the vehicle."

Tesla’s shares dropped 6.2 percent, or $12.05, to close at $180.95 in New York trading on Wednesday.  According to Tesla, the driver of the Model S managed to exit the vehicle safely and then called authorities. A fire caused by damage incurred in the crash was contained.

Tesla is aiming to become the most profitable electric carmaker in the world, employing technology designed in-house.

Ben Kallo, a Robert W. Baird & Co. analyst, remarked that plans by the Palo Alto, Calif.-based carmaker to hike output and add new models increased execution risk that could weigh on the stock. On Wednesday, Kallo downgraded Tesla to neutral from outperform.

Tesla is increasing production of the Model S and plans to introduce a Model X sports utility vehicle. He also said that "any hiccups in execution present stock-price risk in the near to intermediate term," Kallo wrote in a report.

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