A class action lawsuit has been filed against
Tesla Motors, Inc.
) following the recent fire incidents in Model S cars. Law firm
Morgan & Morgan filed the suit on behalf of investors who
purchased the stock between May 10 and Nov 6 this year.
The lawsuit accused Tesla of making misleading statements
regarding the safety of Model S. Additionally, the statements did
not reveal the puncture and fire risks in the car's undercarriage
and lithium ion battery pack. Moreover, it alleges that defects
in the car have led to fire in the battery pack in specific
situations. The lawsuit also holds Tesla liable for failing to
deliver enough cars to offset the fall in revenue from other
sources and alleviate analyst apprehension.
The lawsuit is referring to the recent fire incidents in three
Model S cars. In early October, the first Model S electric
vehicle caught fire near Seattle, U.S. According to Tesla, the
incident took place after the vehicle collided with a "large
metallic object", which damaged the front end of the car. This
mishap was soon followed by a fire in another Model S car in
Merida, Mexico. The vehicle had caught fire after crashing a wall
and hitting a tree.
The third Model S vehicle was reported to have caught fire on
Nov 7, 2013. The incident occurred near Smyrna, Tenn., after the
vehicle hit road debris. The collision led to fire in the front
portion of the vehicle.
Incidentally, Tesla's Model S has won the top vehicle safety
rating from the National Highway Traffic Safety Administration
(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, in a positive development, Tesla sold 6,554 cars in
California through the end of September, according to a report by
the California New Car Dealers Association. The electric carmaker
captured 11% market share in the luxury and sports car segment.
California is the largest market for Tesla's Model S cars.
However, Tesla's sales in California were surpassed by
Toyota Motor Corporation
) Mercedes E-Class and Bayerische Motoren Werke AG's BMW
5-Series. Prius was the top-selling car with 54,000 units sold.
However, Tesla beat Toyota's Lexus GS and
) Audi A6.
Tesla currently retains a Zacks Rank #3 (Hold).
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