Tesla Motors, Inc.
) dropped 2.2% to $137.36 on Dec 6, after two class action
lawsuits were declared against the automaker. Two law firms -
Pomerantz Grossman Hufford Dahlstrom & Gross LLP and Brower
Piven, A Professional Corporation - filed class action lawsuits
on behalf of investors who purchased the stock between May 10 and
Nov 6 this year.
The lawsuits accuse Tesla of making misleading statements
regarding the safety of Model S, including puncture and fire
risks in the car's undercarriage and lithium ion battery pack.
Moreover, the lawsuits claim that defects in the car led to the
battery pack catching fire in specific situations. They also
allege that the defects may affect the future sales and share
price of Tesla. The lawsuits also hold Tesla accountable for
failing to deliver enough cars to offset its fall in revenues
from other sources.
Similar class action lawsuits were started last month against
Tesla by Glancy Binkow & Goldberg LLP, Robbins Geller Rudman
& Dowd LLP and Morgan & Morgan. Law Offices of Howard G.
Smith is also undertaking investigations related to the
The lawsuits are the result of recent fire incidents in three
Model S cars. In early October, the first Model S electric
vehicle caught fire near Seattle, U.S. This mishap was soon
followed by a fire in another Model S car in Merida, Mexico. The
third Model S vehicle reportedly caught fire on Nov 7, 2013 near
Smyrna, Tenn., after the vehicle hit road debris. The collision
led to fire in the front portion of the vehicle.
The National Highway Traffic Safety Administration (NHTSA) has
also started an investigation to uncover any safety defect in
Model S. Last week, the auto regulator asked for various relevant
details from Tesla in relation to the investigation, including
consumer grievances and property damage claims.
The automaker has also been asked to submit details regarding
any design alteration and engineering drawings of Model S to the
U.S. auto regulator. The NHTSA also demanded details of the
after-effect of damage in the battery pack of Model S and the
method adopted by Tesla to solve those problems.
Recently, German Federal Motor Transport Authority or
Kraftfahrt-Bundesamt (KBA) revealed that it did not find any
manufacturing defect in Tesla's Model S. The authority's
statement came after it examined and reviewed the vehicle
following the recent fires. The German authority issued a letter
stating that Tesla does not need to take any further measures for
safety under the German Product Safety Act.
Kraftfahrt-Bundesamt plays a similar role in Germany like the
NHTSA in the U.S. It has the power to recall any vehicles in case
of any detected defect.
Tesla designs and manufactures electric vehicles and electric
vehicle powertrain components for partners including
Toyota Motor Corp.
). The company currently has a Zacks Rank #3 (Hold).
Better-ranked automobile stocks include
Honda Motor Co., Ltd.
Ford Motor Co.
). Both carry a Zacks Rank #2 (Buy).
FORD MOTOR CO (F): Free Stock Analysis Report
HONDA MOTOR (HMC): Free Stock Analysis Report
TESLA MOTORS (TSLA): Free Stock Analysis
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