Elon Musk Optimistic on Federal Investigation of Model S Fires
Elon Musk, CEO of Tesla Motors (NASDAQ: TSLA), has full confidence that its Model S electric car will be cleared by a federal investigation that began last week as a result of two battery fires.
“In both cases it was a large piece of metal essentially braced against the tarmac,” Musk explained to the Associated Press. The piece of metal interacted with the battery, causing a fire.
There were no injuries in either accident, as the fire did not spread to within inside the vehicle. Musk went so far as to explain that no one has ever been hurt in a Model S crash, justifying the car's questionable 5.4 out of 5 star crash rating given by The National Highway Traffic Safety Administration (NHTSA).
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The crashes have certainly received a large share of interest from media, investors and analysts. Musk described the unfair attention as “torture” given the fact that all crash victims have walked away without any serious injury.
Analysts at Barclays noted that the company can likely see a prolonged drop in sales following an investigation. Brian Johnson noted that Toyota (NYSE: TM) and Audi saw sales drop 10 percent to 20 percent during similar investigations.
“Even though both vehicles were later largely exonerated, each of these cases led to significant demand destruction,” Johnson wrote in a research report on Thursday, November 21. Johnson lowered his price target from $141 to $120.
Shares of Tesla were trading higher by around two percent at $125.84 shortly after the opening bell on Monday morning.
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