Tesla Grapples with Impact of Battery Fire in U.S.

The Tesla car maker faced damages after using battery fire, as investors shaved $2.4 billion off the company’s market value.

A Tesla model S car was unveiled during a media preview day at the Frankfurt Motor Show last month. Photo: Angie Williams/Flickr

A couple of days after a video of a burning the “green car” went viral, Tesla Motors Inc grappled with ways to contain the damage.

The car producer has confirmed that its electric vehicle blazed up after it collapsed over a large metallic object on Tuesday morning just south of Seattle, causing extensive damage to the front side of the Tesla car.

According to reports, emergency officials who arrived at the place soon after the accident had been reported, suppose that the fire occurred in the electric vehicle’s lithium-ion battery.

The report of the incident was filed by the fire department in Kent, Washington, describes in details how firefighters put out the blaze, only to see it then reignite under the car.

It also reads that water only intensified the flames, forcing firefighters to use a dry chemical extinguisher to douse most of the fire in the battery pack in the front end of the vehicle, Reuters reports.

The incident turned up to be a real PR nightmare for the care maker, that specializes only in electric vehicles, as opposed to mainstream automakers all over the world.

“The bar is much higher for Tesla,” said James Albertine, analyst at Stifel, Nicolaus & Co, who has a “hold” rating on Tesla shares.

“Tesla cannot weather a sustained onslaught of consumer complaints and incidents that could potentially dent the demand curve for the next vehicle.”

Shortly the incident, the company’s stock had soared almost sixfold this year. On Thursday its shares fell 4.2 percent to close at $173.31 on the Nasdaq. That came on top of a 6.2 percent drop on Wednesday.

The video of the burning sedan S was uploaded online at auto blog Jalopnik and has been widely and extremely quickly spread by other media.

“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. On Wednesday, he downgraded the stock to “neutral” for valuation reasons.

The analyst went on, adding that the fire would hurt not only the vehicle,but sales as well, but he and other experts still expected strong demand going forward.

Tesla officials claim that the unusual type of battery and the sedan itself worked as designed, as its automated system tried to take the fire under control and allowing 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.

Panasonic Corp which supplies the batteries used in the Tesla car, declined to comment on Thursday.

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