Recent video of a Tesla Model S catching fire caused the company's stock to drop about 6 percent on Wednesday. First reported by Jalopnik, the electric car apparently struck a piece of debris in the road, causing significant damage to the front of the vehicle and setting off the fire. Photos of the blaze and the video below quickly circulated around the web:
Tesla has released a statement saying that the crash was caused by the vehicle striking something and not through a fault in the car's engineering. The car actually directed the driver to pull over and seek assistance, and Tesla says the front is engineered to prevent fires from spreading throughout the entirety of the car.
Still, the incident made traders wary, resulting in a $12 dip in the stock price and a closing value just below $181 a share. As The Los Angeles Times explains, "Normally, car fires are not significant events that influence investors. However, safety officials have been tracking fires in electric cars, as well as computers and other equipment, out of concern that the lithium-ion battery systems might be fire-prone."
Lithium-ion batteries are relatively new to the market and with their newness comes volatility. From Reuters:
The Model S, like many other "green cars," is powered by lithium-ion batteries, a relatively new technology to the auto industry that is much more powerful than the traditional lead-acid batteries, but also carries a larger safety risk, battery experts have said.
The fire incident is likely a minor setback for the $23 billion company, whose stock has jumped more than 400 percent since January.