Tesla CEO Expects No Recall - Analyst Blog

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Elon Musk, the CEO of Tesla Motors, Inc. ( TSLA ), revealed in an interview with The Associated Press that he expects Model S to be cleared by the National Highway Traffic Safety Administration (NHTSA) in the ongoing fire-related investigation. He believes that the car is safe and hence, does not expect the investigation to result in a recall.

According to the CEO, a crash under similar circumstances in other cars would likely have resulted in injuries to passengers. However, the placement of the battery pack below the passenger compartment in the Model S protected the occupants. Musk also believes that the quarter-inch-thick heat-treated aluminum shield covering the battery pack is adequate to protect the car battery and Tesla's engineers are not working toward its enhancement.

Alongside the affirmation of his confidence in the safety standards of the car, Musk also said that the car owners are financially safe from the impact of the fires now that Tesla has added fire coverage to its warranty. Further, he revealed that sales of Model S have surpassed expectations so far this quarter. Investors were earlier concerned that the recent fires might affect car sales.

Last week, Musk announced certain measures that are being implemented by the automaker in the light of the recent Model S fires and the consequential negative media coverage. The company provided a wireless update to increase the ground clearance of Model S during high-speed driving.

Additionally, Tesla expanded the warranty coverage to include any fire damage, even if it is the driver's mistake. The company also requested the NHTSA to investigate the recent Model S fire incidents.

Meanwhile, the NHTSA announced that it will start investigating the Model S fires. However, the agency revealed that the investigation was not being conducted in response to Tesla's request.

Tesla currently retains a Zacks Rank #3 (Hold). Other major automobile stocks worth considering are Daimler AG ( DDAIF ), General Motors Company ( GM ) and Ford Motor Co. ( F ). While Ford carries a Zacks Rank #1 (Strong Buy), General Motors and Daimler are Zacks Rank #2 (Buy) stocks.



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: DDAIF , F , GM , TSLA

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