Car fires may have raised concerns about the safety of Tesla Motors Inc. (NASDAQ: TSLA) cars. However, the National Highway Traffic Safety Administration (NHTSA) does not believe the problem is great enough to strip the electric auto manufacturer of its coveted five-star safety rating — a sign that the government has not let the engine fire problem change its opinion about its original evaluation of the Tesla S model.
According to Tesla:
The National Highway Traffic Safety Administration (NHTSA) has reaffirmed the 5-star safety rating of the Tesla Model S overall and in all subcategories for Model Year 2014, confirming the highest safety rating in America. While Tesla is awaiting feedback from NHTSA regarding their investigation of recent fire incidents, the German Federal Motor Transport Authority, Kraftfahrt-Bundesamt (KBA), recently concluded its review of the incidents, finding no manufacturer-related defects or need for further action.
It is worth noting that a Tesla vehicle is over five times less likely to experience a fire than the average gasoline car and that there have been zero serious injuries or deaths for any reason ever, fire or otherwise, in a Model S. Over the course of more than 100 million miles driven in almost every possible terrain, weather and crash conditions, the Tesla Model S has consistently protected its driver and passengers, achieving the best safety track record of any car on the road.
The news should help the turnaround of America’s hottest car company, the image of which has been hurt by these reports of engine fires. Tesla’s shares have dropped from a 52-week high of $194.50 to just above $143.
Tesla needs to quickly escape the negative perception of its flagship car because, although the company’s name has become a household word, the firm is still very small and financially vulnerable, and it sells very few cars.
In its third-quarter earnings release, the company reported:
We are now producing 550 cars per week with improved process controls which consistently result in high quality cars. Consequently, we finished the quarter with a record of slightly over 5,500 deliveries, including over 1,000 deliveries to European customers.
Tesla’s total revenue for the period was only $431 million, and the company had a net loss of $38 million.
Tesla may have won a number of awards that hail it as the world’s best car, but its car fire problems have not ended. However, the NHTSA rating should be a step toward restoring its previously sterling brand.