The nascent battery-car market just might be short-circuiting.

If this year is average, about 194,000 vehicles will catch fire before the ball drops in Times Square. And, for the moment at least, just one of them will have been a Tesla Model S. Of course, it didn't help that a passerby happened to catch that blaze in the Seattle suburbs earlier this month, quickly posting the video on YouTube (you can watch it yourself below).

Within hours, the images had gone viral and it didn't take much longer for Tesla investors to scramble to start selling off their shares, the high-flying stock plunging from a 52-week high of nearly $195 to as low as $163. Of course, that was still a heck of an increase from the year's low-point, but it suggested that much like the space station supply ships launched by Tesla founder Elon Musk's other venture, SpaceX, what goes up eventually may just have to come back down. It has also raised new concerns that the nascent battery-car market just might be short-circuiting.


Paul EisensteinPaul A. Eisenstein is Publisher of TheDetroitBureau.com and a 30-year veteran of the automotive beat. His editorials bring his unique perspective and deep understanding of the auto world to Autoblog readers on a regular basis.


Due to the federal government shutdown, the normal investigation by the National Highway Traffic Safety Administration couldn't take place. But by the end of the week, the social media-savvy Musk was blogging and tweeting away, explaining that Tesla's internal investigation echoed the Model S owner's initial report: a large chunk of metallic road debris, he explained, had punched a three-inch hole in the armor plate designed to protect the sedan's battery pack from routine damage.

In turn, part of the pack shorted out, setting off a blaze that owner Robert Carlson said, the "images really exaggerate." Significantly, it appears the car's warning system actually advised Carlson to pull over and exit the Model S before the flames could be seen or felt, possibly saving his life.



Nonetheless, Musk isn't the only one who has been talking about the fire, and bloggers and traditional journalists alike have not necessarily been as charitable as he might like. Indeed, even normally friendly media outlets like NPR have lumped the incident in with other recent battery fires, including those involving Chevy Volts, Fisker Karmas – and the big Boeing 787. The so-called Dreamliner looked more like an airborne nightmare when its own lithium-ion backup battery system caught fire on a JAL aircraft earlier this year, leading to a temporary grounding of the entire 787 fleet.

Is this "just a blip," as analyst George Peterson, of AutoPacific, Inc., suggests? Or has the Tesla fire cast a chill over not just the Model S but the entire battery-electric vehicle market?

There's no question that sales of electrified vehicles have been falling well short of proponents' expectations.

There's no question that sales of electrified vehicles have been falling well short of proponents' expectations, especially if you exclude traditional hybrids – the Toyota Prius in particular. Actually, you can include the Prius Plug-In, as the Japanese maker this week was forced to trim the price of that extended-range model by as much as $4,620. Sales of the Prius Plug-in were off a whopping 30 percent in September.

The Chevy Volt was down 47 percent, while the Nissan Leaf, which had been gaining momentum earlier in the year, slipped 19 percent. Even the Tesla Model S, well before the Seattle fire, dropped 20 percent after exceeding company forecasts for the first eight months of 2013.

True, the overall US car market was down in September for the first time in over two years, and analysts caution that much of the decline was due to flukes in the way last month's numbers were reported. But battery-car sales were nonetheless down in September much more sharply than the overall industry's decline, even as some of the biggest, most fuel-thirsty machines, such as the Ford F-Series, picked up momentum.

Battery-car sales were nonetheless down in September much more sharply than the overall industry's decline.

So, there's good reason to watch October's battery-car sales quite closely. Will all the coverage of the Model S fire, indeed, blip off the screen as the media shifts attention to such things as Washington's budget crisis, the SUV/biker assaults in New York – and the latest PR stunt by Miley Cyrus?

Even without the fire, battery-based vehicles have been a tough sell. Toyota was only the latest maker to slash prices hoping to lure reluctant buyers into showrooms. About the only one who hasn't taken that step yet has been Tesla. Might it also have to come up with incentives if sales slip?

As for investors, Tesla stock didn't bottom out for long. Analyst Peterson suggests "the event" may simply have "giving investors a rationale" to sell off some stock and reap profits after the gains they'd made earlier in the year. Even at $163 a share, anyone who'd held Tesla stock for more than a few months made out like a high-tech bandit.

Several key analysts have now suggested the company is already flying, Icarus-like, a little too close to the sun.

The stock has been rising, in fits-and-starts, in recent days, jumping $4.15 a share on a Thursday that saw Wall Street breathe a collective sigh of relief as Washington seemed ready to avert a government debt default. But will Tesla reach previous highs? Several key analysts have now suggested the company is already flying, Icarus-like, a little too close to the sun. A bad third-quarter earnings report could lead to an even faster exodus than the Model S fire.

Then again, Musk and company have been quite effective at turning a typically skeptical media to their own advantage. It's just possible that Tesla will bounce back, even as the rest of the electric car market struggles – and as competing start-ups like Fisker fold.

But, for the moment, even if we don't see another fire, the electric vehicle market clearly needs to recharge its batteries in a hurry.


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  • 134 Comments
      11fiveoh
      • 1 Year Ago
      I really hope this freak accident doesn't change peoples minds.
      mawhalen53
      • 1 Year Ago
      We'll never know for sure, but I argue that the drop in Tesla's stock price was not solely motivated by the fire. The morning of the day of the fire the stock was downgraded by R. W. Baird analyst Ben Kallo, and it was already down before the fire was widely reported. In addition, much of the market took a hit that day as the stock market was dropping on government shutdown fears. I think the Model S fire was unremarkable, and notable only in that it was the first incident. I take two points away from it: first, the car's HV battery safety systems functioned as intended and the driver was able to make a safe getaway; second, fire departments will need to adapt their techniques as more battery vehicles come to public roads.
        brandon
        • 1 Year Ago
        @mawhalen53
        I think firefighters need more training not only how to handle battery fires, but high-voltage systems in general. The current levels alone can kill a person.
      ferps
      • 1 Year Ago
      back to horses. nothing else is safe.
        Shiftright
        • 1 Year Ago
        @ferps
        HORSES BITE AND TRAMPLE! STAY INDOORS AT ALL TIMES!
        Jesse Gurr
        • 1 Year Ago
        @ferps
        Horse carriages have a problem with unintended acceleration. I'm sure many people have died because the horses started running and they couldn't stop. Guess we better get back to walking cuz nothing else is safe!
          Grendal
          • 1 Year Ago
          @Jesse Gurr
          I have a tendency to trip over my own feet. Not safe there either!
        raktmn
        • 1 Year Ago
        @ferps
        I would say back to bicycles, but my damn bike bucked me off in July, and I still haven't been able to get back on yet. Bike manufacturer stocks must plummet at my singular individual accident!! Not safe at any speeds!!
        methos1999
        • 1 Year Ago
        @ferps
        Dangerous at both ends and crafty in the middle.
      itsme38269
      • 1 Year Ago
      So why hasn't this article been deleted yet? Literally every comment has called it out as being inaccurate trash. Autoblog, you're better than this.
        Grendal
        • 1 Year Ago
        @itsme38269
        Deleted. No. AB wants controversy and comments. That's how they get paid. A blatantly controversial article just brings in more money whether it is correct or not.
        ElectricAvenue
        • 1 Year Ago
        @itsme38269
        Actually, no they aren't.
      Technoir
      • 1 Year Ago
      This "article" has no journalistic substance.
      MTN RANGER
      • 1 Year Ago
      PEVs are priced too high - bad. PEVs get price drops - bad. You can't win with the naysayers.
      Sasparilla Fizz
      • 1 Year Ago
      "Even without the fire, battery-based vehicles have been a tough sell." It's interesting to see these kinds of statements when plug-ins have sold much better than hybrids initially did despite being significantly more expensive. Plug-ins are doing just fine. And with battery tech constantly improving and getting cheaper, their sales environment will only continue to grow...by 2020 battery prices should be down enough that plug-ins become no brainer's for their value on 20k and up vehicles. Now all that said, the $75k Caddy XLR will be a true sales dud, just from its ridiculous price-tag.
      Jeff Gilleran
      • 1 Year Ago
      This is merely a kneejerk reaction on an otherwise a completely excellent product. Its funny how something "unusual" and proven as "unusual" is suddenly a big deal. Oh no!.. It could catch fire!. Cars have been going up in flames in one way or another for generations. And this one smoldered, it didn't EXPLODE as a Gasser could. This was just an odd account to a system that was built to protect the batteries the best way possible and not add excess weight to the car. Once batteries get ever smaller, this conversation will probably still pop up in some off the wall way.. "Baby sticks bottle into primary power pack and ignites malt o meal by accidental spilling into power cell". Yes guys, we currently use technology that can catch on fire if you jab a hunk of hard steel through a protective plate and into a Lithium Ion battery pack that catches fire when the damaged cells are exposed to oxygen. I don't mean to be sarcastic, but this is pretty silly. Useless situation, not even close to worth bothering with, or worrying about a 1 in a million shot of it happening again.
      jeff
      • 1 Year Ago
      Tesla reservations indicate that they are selling far more than predicted this year. BMW has said that they already have 8000 reservations for the i3 that will not be on sale until next month. So, it looks like this is complete BS from an EV hater...
        Grendal
        • 1 Year Ago
        @jeff
        The Nissan Leaf had a huge number of reservations too. When it comes down to the buying - not so much. The Leaf is doing fine and I hope the BMW i3 does well too. Even the Model S reservation number was a bit inflated.
      tump
      • 1 Year Ago
      I bought TSLA at $28. I most certainly am NOT scrambling to sell my shares anytime soon.
      Worx2749
      • 1 Year Ago
      Why the huge fuss over ONE Tesla fire? It's not like they're Pintos, fer crissake.
        Jeff Gilleran
        • 1 Year Ago
        @Worx2749
        What's really odd is that the Mustang from 1964 1/2 thru 1970 had a real potential for gas to spray into the interior through the trunk into the backseat and onto the occupants when rear ended, and occasionally catching on fire, killing everyone. They never made this unfortunate design known? The Pinto was not any safer when introduced in 1971, but carrying on with the same general fuel tank design as the mustang. The Pinto caught all the media attention oddly enough. The later model years did away with the problem for both the Pinto and the Mustang, but the bad reputation really hurt the Pinto. Maybe planned by Ford? Make the Pinto the Fall guy because they knew it wasn't going to be the seller the Mustang could be. Really makes you wonder.
      Alex K
      • 1 Year Ago
      "Even the Tesla Model S, well before the Seattle fire, dropped 20 percent after exceeding company forecasts for the first eight months of 2013.” Tesla does not release monthly sales figures and they have not released their quarterly sales figures yet. So where did this 20% drop figure come from?
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