Tesla Motors (TSLA) saw significant gains on Dec. 3 following a favorable safety ruling from German regulators, somewhat dispelling growing concerns the company’s flagship Model S vehicle would be recalled stateside.
Tesla’s shares have whipsawed violently this month after more than tripling in 2013. The electric carmaker is the undisputed king of green energy vehicle manufacturing, and prior to October had experienced a more or less uninterrupted yearlong surge. However, a spate of fires connected to the Model S sedan had sparked concerns about the car’s safety and the possibility of a nationwide recall.
Those fears have dissipated with findings that seemed to exonerate the carmaker, one that has seen more vociferous bulls and bears than perhaps any other single play on the market.
Recall Fears Mitigated
Like Tesla’s own stock, concerns over electric car safety are sometimes fueled more by fervor and less by hard fact. To be sure, Tesla Model S vehicles seem to catch fire in accidents more often than a traditional gas-powered cars. Since rolling out production, three Teslas have caught fire after impact, with two instances in the US and one in Mexico.
On the surface, three cars bursting into flames in the same year is worrying indeed, especially considering that there are only 20,000 total Model S sedans on the road. However, digging deeper reveals when taken into context, those cars are still one of the safest on the market.
When looking into whether the car fires were due to defect, German authorities found no manufacturer fault, and pinned the fires not on a design flaw but on roadside debris struck at a high speed – and in the case of the Mexican crash, the driver losing control and striking a stone wall.
Model S sedans do catch fire in high-speed accidents, as gas-powered vehicles sometimes do as well. But they are free of “manufacturer-related defects,” according to the German Federal Motor Transport Authority report.
Though it may seem glib to dismiss any car fire, the fact remains that all cars carry some inherent risk just by being on the road. And even incorporating the three fires into the Model S safety record, Tesla’s car is still one of the safest on the road.
Model (S)afety Goes to Eleven
In July Consumer Reports gave the Model S a score 99 out of 100, making it the highest-rated car in 2013, and claimed the car “aced” their crash tests. In August the National Highway Traffic Safety Administration awarded the Model S a score of 5.4 out of 5. The car literally scored off the charts, as it broke the machine used to test body strength.
This did not stop the NHTSA from launching an investigation into Tesla in November. To be fair, the investigation was to be expected – videos of the Model S fires had gone viral, and the NHTSA was under intense public pressure to look into the case.
But the car fires, which resulted in no deaths, are statistically insignificant when compared to the overall safety of the Model S. It’s like the old adage: a person is more likely to die on the cab ride to the airport than they are in a plane crash. The same holds true with Tesla: according to the safety tests, a person is more likely to die in a gasoline-powered car crash than they are in the otherwise exceedingly safe Model S. But still, misconceptions persist, because electric car fires, like plane crashes, get far more press than the more than 34,000 fatalities in the US attributed to motor vehicles a year - a number that has declined significantly since the 1970s, as cars continue to get safer.
The German authorities finding no fault with the manufacturer in the car fires boosted Tesla after a nearly two month slide. The company’s stock rose 14.13 by midday trading to hit $141.71 a share.
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