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Injury risk from Tesla car fires reflected by stock drop

Tesla Motors shares continued to fall after another fire was reported in one of the company's luxury electric cars, which might be a concern for both investors and drivers in Iowa. Although reports indicate that the fires were direct results of car accidents, the news, combined with a major automobile reviewer pointing out noise problems with some Tesla vehicles, led to a drop in the company's stock.

A nine percent drop in trading on Nov. 7 followed Nov. 6 plunge of 15 percent based on news of limited supplies of batteries for its cars. Also worrying investors was Tesla's announcement that it would be spending heavily on research and development in the design of new models. Despite the recent setbacks, the company's shares enjoyed a 400 percent increase since the beginning of 2013.

The influential car shopping site Edmunds.com said in a review of the 2013 Tesla Model S luxury hatchback that it made an ominous noise while accelerating or decelerating. The reviewer said that the sound originated from the rear of the car and seemed to be getting worse. The same criticism was being shared on an online Tesla owners discussion group that the company hosts for drivers of its vehicles.

The National Fire Protection Association estimates that there are about 150,000 car fires every year, and usually they are not seen as significant enough to affect investors. Recently, however, safety agencies have been tracking such incidents in electric cars out of concern that lithium-ion batteries might be prone to fires.

Although Tesla's problems are reportedly with noise and potential fires, car accidents are usually caused by driver errors. Individuals who have suffered injuries due to a driver's negligence might choose to file a personal injury claim in order to recover what was spent on medical bills and property repairs.

Source: Los Angeles Times, "Tesla shares slip more on reports of third fire, other car problems", Jerry Hirsch, November 07, 2013

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