Tesla Model S Fires: Where Is The Debate Headed?

Tesla Model S Fires: Where Is The Debate Headed?
Blomst / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) shareholders tasted some good news recently after the German Federal Motor Transport Authority said there were no manufacturing defects in its Model S cars. Tesla Motors Inc (NASDAQ:TSLA)’s flagship electric vehicle faced widespread criticism and NHTSA investigation after three crash-related fire incidents in less than six weeks. Jefferies analyst Elaine Kwei said in a research note that the stock is now well-positioned to go up. After the green light from German authorities, Jefferies expects the NHTSA investigation to yield neutral results. Maybe minor modifications or no recalls.

Tesla Model S and Paul Walker

Of course, it:’s hard to say that three car fires in less than six weeks is a matter of pure chance. But Jefferies says no such accident has been reported in California, the dominant market for Tesla Motors Inc (NASDAQ:TSLA). There have been statistical debates as to whether Model S is more vulnerable to car fires. A statistical conclusion may not be accurate given the small sample size.

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But the unfortunate death of The Fast & The Furious star Paul Walker in Los Angeles may turn the debate to occupant safety. Despite the several crash-related car fires in Model S, all the drivers walked away with minor or no injuries. So, the debate would eventually be about whether the Model S is a safer vehicle

BMW i3: where it stands?

BMW recently showcased its compact 4-seater all-electric vehicle i3 at Los Angeles Auto Show. The vehicle has a range of 80-100 miles, and comes with an optional range extender. Fortunately, Elalne Kwei had the chance to test drive BMW i3 during the Auto Show. Kwei was impressed with the vehicle’s look and performance. The i3 will hit the German market by the end of this year. But it won’t go for sale in the U.S. until 2Q2014. It is expected to be priced at $41,000, but the federal tax credits of $7,500 would bring down the price to $34K.

Jefferies believes that the i3 is not a competitor to the Model S. It’s a bridge between the short-range, non-luxury electric vehicles and the Model S. Elalne Kwei thinks the BMW i3 would raise consumer awareness about electric vehicles. It would be a direct competitor to Tesla Motors Inc (NASDAQ:TSLA)’s planned mass market vehicle Gen III in functionality and performance.

Tesla Motors Inc (NASDAQ:TSLA) shares jumped 2.58% to $142.50 at 10:19 AM EST. Jefferies has a Buy rating on the stock with a $190 price target.

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