Tesla Motors, Inc.
) CEO Elon Musk announced certain measures being implemented by
the automaker in the light of the recent Model S fires and the
resultant negative media coverage. Three incidents of fire in
five weeks can only dent a vehicle's brand image and the CEO's
damage-control strategy was much needed. Musk also defended the
safety standards of the car.
The company is providing a wireless update to the air
suspension to increase the ground clearance of the car during
high speed travel. This is expected to reduce the probability of
damage to the car due to any underbody impact. In Jan 2014, Tesla
plans to release another software update that will enable the
driver to control the air suspension ride height transitions.
Additionally, Tesla is expanding the warranty coverage to
include any damage caused by fire even if it is a driver's
mistake. While this move is aimed at easing the apprehensions of
potential buyers, it also shows the automaker's confidence in its
Apart from these actions, Tesla also contacted the National
Highway Traffic Safety Administration (NHTSA) to request for an
investigation into the recent fires in Model S cars. The company
believes that this move will provide scope for improvements
related to fire safety of the car, although it emphasized that
the probability of such a discovery is low.
Musk also used statistical data to illustrate that Model S has
less than one-fourth chance of catching fire compared to a
gasoline car. He also highlighted the car's strong safety
Tesla's Model S has won the top vehicle safety rating from the
NHTSA. The car obtained a five-star rating overall and also for
each of its subcategories. This was a coveted award for Tesla as
only 1% of cars tested receive the 5-star rating from NHTSA. This
rating means that Tesla's Model S sedan offers exceptional safety
to the passengers as it has the lowest possibility of injury to
passengers among all major cars sold in the U.S. The safety score
of this sedan exceeded the score of most sports utility vehicles
Meanwhile, the NHTSA announced that it will start an
investigation into the Model S fires. However, the agency
revealed that the investigation was not being conducted in
response to Tesla's request.
Two of the three fires in Model S cars were sparked after
debris on the road hit the undercarriage. The NHTSA will
investigate whether Model S has any defect that needs to be
Tesla currently retains a Zacks Rank #3 (Hold). Other major
automobile stocks worth considering are
General Motors Company
Ford Motor Co.
). While Ford and Daimler are Zacks Rank #1 (Strong Buy) stocks,
General Motors carries a Zacks Rank #2 (Buy).
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